c:\development
unless you want to fiddle around with options (see fpcup --help)
Yes, just put it there.
It's best if tortoisesvn's directory with svn.exe is in your path.
Otherwise no problem, it will download its own svn.exe but you won't get the SVN revision number in your Lazarus/About screen, which can be handy.
Good idea to keep 2 separate installs. That's the way I use it too.