I can't answer all of your questions, but the answer to #3 is China. As for the legality of the site, here is some information:
US Copyright Code Title 17, Chapter 1, § 111. Limitations on exclusive rights: Secondary transmissions, subsection a5:
(a) Certain Secondary Transmissions Exempted.— The secondary transmission of a performance or display of a work embodied in a primary transmission is not an infringement of copyright if—
(5) the secondary transmission is not made by a cable system but is made by a governmental body, or other nonprofit organization, without any purpose of direct or indirect commercial advantage, and without charge to the recipients of the secondary transmission other than assessments necessary to defray the actual and reasonable costs of maintaining and operating the secondary transmission service.
Subsection 3 might also apply but I am not entirely sure as it would apply more to the free side then the VIP side.
(3) the secondary transmission is made by any carrier who has no direct or indirect control over the content or selection of the primary transmission or over the particular recipients of the secondary transmission, and whose activities with respect to the secondary transmission consist solely of providing wires, cables, or other communications channels for the use of others: Provided, That the provisions of this clause extend only to the activities of said carrier with respect to secondary transmissions and do not exempt from liability the activities of others with respect to their own primary or secondary transmissions;
http://www.law.cornell.edu/uscode/html/uscode17/usc_sec_17_00000111----000-.html
I hope this helps to put your mind somewhat at ease.
Barb
