3) Does the turbine .....
As Guy mentions above you can either generate AC direct into the grid or you can generate AC and rectify it to DC and then invert it back to AC into the grid. Or, I suppose, you could generate DC from the turbine and then invert to AC.
In addition to other things to think about:
If you connect an AC generator to the grid you need to have a load of custom control gear to get it on and off the grid as per the G83/1 specification. If you convert to DC and then to the grid via an inverter, all that work is done for you.
If you connect an AC generator to the grid and the water supply falls, the generator will turn into a motor and will pull energy from the grid. Which means, you need more control gear to sense which direction the current is flowing in and take the appropriate action. If you convert to DC and then use an inverter to make grid AC, the inverter will continue to convert whatever the turbine makes irrespective of how much or how little.