(1) I traveled through the same route (KTM-AUH-ORD-MSP) 3 months ago. I checked in my 2 luggages in Kathmandu and picked them up in Minneapolis. My arrival in Chicago was treated like Domestic and same in Minneapolis which was my final destination.
(2) Point of Entry (POE) is Abu Dhabi. They have a huge processing center there. My transit was 4 hours long and my total time between going there and coming out was 3 hours. I was in line for close to 2 hours.
(3) Officer showed me the picture of my baggages, I said yes. He sent me inside to another officer. I waited for 30 minutes again. I was called in. My luggage came in to Conveyor Belt and they asked me what I had (Food items). I had Chiura, Til seeds, besar, masala. Officer asked me what that was and I said, that is what I had claimed. As long as you claim what you have and it is not seed (Til seeds were for achar so I was good) or meat, you should be good.
(4) Hotel for transit varies by agent. Last year, my parents went through Doha and they were provided a free hotel and food. They were happy. Next time my in laws traveled but my agent in Nepal did not provide free hotel despite of having 12+ hours of transit. It also depends on your relationship with the agent you buy ticket from.... This is from my experience.
My last words - if your parents do not speak good English, do not tell them to bring a lot of stuff. That is like looking for trouble. You can buy almost anything in States. Tell them to relax and do not bring anything for you. My mom ended up bringing things and they were in trouble couple times and now, they do not do it any more. A lot of these things also depend on how the officer is or how good you deal with others. Again, only my thoughts.

Hope this information was helpful.