Hallo there. I'm going to move this to the Game Help board as these are questions related to the game itself.
1. The Last Cave glitch (also known as Freaky Friday, or the possession glitch) was a glitch that occured when your game crashed and you logged back in as someone else's character. This glitch primarily happened in Last Cave, but was and still is possible to happen in other maps. It's due to connection issues on the user's end, nothing to do with the game code.
2. I'm unaware of why it was never finished; perhaps the old staff weren't really interested in implementing it into the game after Kovu left. Or maybe they weren't able to do anything about it as no one had the source code for a long time.
3. I haven't been around since the very beginning in 2010, I joined FH in very early 2012, so I can't confirm or deny this completely, but I'm going to assume and say no. From my time here, I've never heard of Lonely Cave originally being a small Bonfire Island. Of course, I could be wrong, so don't take my word for it, but I've only ever known it to be what was seen before the 1.15 update. However, in a seperate version of FH called FH+, Bonfire Island was the default Lonely Cave. I also know that during the developement of FH, a plain/naked version of Bonfire was used for the background of the character creation screen.
4. Tigg was one of the developers for FH, and I believe she made several maps that were supposed to be in the game, but weren't. Quite a few were cancelled, or she remade, such as the savannah map she mentions in the video you're talking about, which I'm pretty sure became Fluorite Plains. Why they weren't put into the game exactly is really a question only Tigg can answer.
5. There's quite a number of different strange glitches, but nothing as big as Freaky Friday. Some of the most popular would be the tongue/face glitch, jumping glitch, and flashing character glitch (character flashes from invisible to visible rapidly). One of the older glitches was in the chat box an announcment like "Blank has arrived" would appear in the group text. That hasn't happened since the 1.15 update though.
Hope this answers your questions!