Ron
Regarding your questions:
1) I have not a clue what the quincy shop crew was planning to do. It may have been a case of "she needs work so tear it apart and fix it" followed by am "Oh crap this is worse than we thought"
2) I think that the Huck acquired the #3 because it was a Michigan narrow gauge locomotive that would have been an ideal size to run our trains with. From the little I've looked at it a the combination of a shim under the smoke box and new frames might work. But as Mr. Allen says a repoduction would be the better option in both reliability and cost. There is very little salvagable material in #3.
3) I'm not going to speculate. There are bigger gorilla's to deal with right now.
#3's boiler has double butt strap seams on the barrel and the roof/wrapper seam is a standard lap joint. There is severe pitting on all of the barrel courses and the rivits in the firebox area are crumbling.