Ceramic Tile Floor Installation

I wouldn't (and didn't). I don't like the idea of a hard tile surface on a softer sub-floor. Tile is enough expense and work to put down, I'd do the additional work to take up the linoleum (or vinyl). Things may get diceier if the flooring is asbestos, but I'd still rip it up (or move).

Dunno, never used it. Tile really doesn't have to be level, only relatively flat. Thinset is good for leveling too and won't run down the drain, though I do make sure it's well covered before using mud around it (getting mud in the works could make for a bad day).

I agree, rip it up and put down cement board or similar if the subfloor has any flex at all. Unless you do use the leveling compound.

The leveling compund will flow into cracks and gaps, it is about the consistency of mustard when it is first mixed. Like Keith said you don't need it if your floor is flat. If you do use it, mix enough to do the whole floor in one batch. It needs a little help to self-level, I used an old broom to spread it out. Also make sure you aren't going to cause problems with your toilet, if the floor is too high at the connection it could be difficult to fix.

Shouldn't be too much of a problem. They sell 1/2" extender rings that fit over the waste flange and thick was seals. I use both when I tile (w/hardibacker) under my toilets.

I've always gotten good advice on the John Bridge Forum for tile work:

They work too. As for the linoleum either rip it up or leave it but in any case put down a cement board. I prefer using a quarter inch hardibacker. I use 1-1/4 inch galvanized roofing nails. Put down ever six inches on the dots, that tile isn't going to move. Even with preparation the tile will eventually work loose from linoleum.