1) - apart from smoothing and carving enravings/fortifications, is there anything you can do with map border tiles?
Not that I've been able to determine. You can't dig or channel them, but you can smooth, engrave, or make them into fortifications.
2) - If you cover the edge of the map with a series of drawbridges which are then raised, what will happen to the incoming creatures/invaders/merchants?
If there are no accessible tiles at the edge of the map, creatures, invaders, merchants, and immigrants simply won't ever appear.
3) - if you leave only a couple squares on the edge unblocked, will the people that try to spawn on the blocked squares not spawn or be funneled into these areas?
Yes, if there are only a few tiles accessible everything will spawn in them. Often at the same time, with hilarious results.
4) - If I were to have a fortress that has an entirely military population, would there be any problems with assigning a military person as a broker (to trade for food/booze)? how would I be able to activate mechanisms with my dwarves (since they cannot pull levers anymore)?
I don't know, I've never tried a fortress with a 100% military population. Would be interesting, at least until everyone starved to death.