1. RIPv2 is what you would definitely use if you were going to go that way. The vast majority of networks I see are running OSPF, followed by basic static routes, and RIPv2 running last.
2. You can use MD5 authentication, can't remember if ProCurves support this though, quick look through the manual should verify this.
3. Good question, RIP can use auto-summary, so if you did have a large RIP network and you planned it correctly, it shouldn't be an issue. You'll run into other scalability problems before you hit that limit.
4. Not an issue with RIPv2.
Check this out, it's quite good:
http://www.hp.com/rnd/training/technical/IRF.htm