1. It really is alot of food! You'd be amazed at how calorie-dense the things most people eat are. When you eat right, there's alot of chewing involved! Don't worry though, you'll adjust to it soon enough.
2. Your block requirement is your calorie deficit diet. 17 blocks a day is only about 1500 calories, as counted by The Zone. There are additional calories from things like the carbohydrates and protein in nuts, when they are counted as solely fat, but that is negligible. After you loose weight, you *usually* increase your fat intake from 2-5x in order to get the calories you need. Note that on that PDF, each protein block has 1/2 block of fat included in it, and the list of fat blocks is actually a list of 1/2 blocks. (eg. 3 almonds is only a half block of fat, but this is matched by a block of protein; for additional 2-5x fat, there is no protein block to give the other 1/2 fat block, so 6 almonds would be a full block)
3. You probably don't want more than 5 at any one time, because that's just alot to chew. You can split it up anyway you want though, anywhere from 5-7+ meals. Just be sure to eat it.
4. Pretty much any fruit/veggie is better than grains, oats, starches, or sugar. Even a banana, which has a high glycemic index, has a low enough glycemic load (use Wikipedia) that it's acceptable. I eat far more fruit than veggies though, because the sheer volume of veggies you need to eat is outrageous. Then again, so are the RDA nutritional values it gives. A good diet will give 200%+ in most, if not all, nutrients, whereas the Standard American Diet (SAD), will average 25-75%.
5. Fish oil is an Omega-3 supplement. One tablespoon is about 2.4g of EPA+DHA. It also has the added benefits of Vitamins A & D, and it's cheaper than taking 8+ fish oil capsules a day.