I can only take some preliminary guesswork as I have never used this theme. It is well written but also more complex than a standard theme.
I cannot see anything in the menu generation function that would prevent submenus, and the stylesheet has proper entries for "children" of menu items. Have you tried making submenus? You just drag them over a smidgen in the menu editor to make them indented under the parent (sorry if this is stuff you know).
Yes, but it would take some additional templates to the theme. The logic for the home template could be set to just display posts from the main blog (your announcements). A new template would need to be written to provide the functionality of the one that appears front now.
Or it is possible to add above the aggregation perhaps just the most recent post (as announcement) and a link to the archives to see more.
To do this w/o any template monkeying, you could use a recent posts widget in your sidebar.
This would be insanely complex, I cannot really see doing this. My recommendation would be to make the assignment bank it's own subsite or separate domain (you are running multisite so it should be able to added, not sure if the aggregator would get confused, but it actually generates no normal blog posts).
When you say change the colors of the theme do you mean The Oberlin one or the Assignment Bank? Either is possible if you can sort of CSS.
This is a bit beyond basic theme editing, though the course would likely help with an understanding of how the templates work. A child theme would not really help with the Oberlin one (guessing again) because it is quite complex.
Bottom line, making these changes would take some moderate to advanced knowledge of Wordpress under the hood.