Originally, the proposal from the state was to build the road all the way to Skagway, actually connecting to the North American road network. But the city of Skagway was opposed to this idea. So, they went and designated basically the entire area between where development currently ends and the city limits on the south side of the east shore as a city park specifically in order to block this proposal. Section 4(f) says you can't take parkland to build infrastructure unless there is no viable alternative, so the state was forced to scale the plan back and still keep a shorter ferry ride in order to avoid touching the "park".
A little more complicated than that. Haines, the main ferry port to get to Juneau, jumped up and down and screamed over being bypassed. Skagway would've been equally upset if a bridge were built across Lynn Canal to get to Haines (especially if it would've cut off Skagway from the ferry system), but my guess is it also wasn't thrilled at the prospect of Juneau-bound tourists just driving through Skagway without having to wait for a ferry and shop at local merchants while they waited. The shuttle ferry plan leaves Haines and Skagway on equal footing, and more importantly makes them much less likely to oppose the project (the enviros will be trouble enough).
And if/when the new road opens, you'll probably still need a four-wheel drive vehicle to access the state capital anyway.
Nope. Would be just a regular two-lane road, except for the avalanche sheds. And if there's an avalanche the sheds can't handle, a 4x4 will do you no good.
The north end of existing AK 7 north of Juneau, starting at Echo Cove, is unpaved. However, at that point the last few miles of the highway is basically just for mine access for now. No reason not to pave it, if the highway were extended. And even if it were unpaved, so what? My Prius easily handled it.