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1) Fairly certain you can implment a controller based password for each live account. Just remember what the hell it is. Worth noting if you use a Credit Card to buy things on the marketplace, it'll saved permantely and if someone else's accesses your account they buy things willy nilly.

2) I've been told it does actually work, even if it's technically not suppose to.

3) Doom and Geometry Wars were the only ones I got. I thought they were both worth it. Castlevania is popular.