3&4) Take a look at http://www.ludespeed.com/

The owner of that site used to make turbo kits for the 3rd gen prelude a couple years ago but stopped due to lack of real demand. Lots of people wanted kits but few people were willing to put up the money. The kit he offered was constantly upgraded and relatively cheap but it appears he no longer offers it.

He made some pretty impressive gains with the turbo and the stock B20a5 BTW. So much, that I'd almost consider going the custom turbo route before dropping an H series in.

5&6) I have never seen a successful B series swap into the car but supposedly the H swap has been done. Hondaprelude.com used to have a few members who claimed to have done it.

Unfortunately, one of the problems is that most 3rd gen prelude owners are on a budget. Many times, that's part of the reason they drive them even if they are great cars IMO. So I would say that it really depends on your friend's goals. If it's anything, my brother's had his 1988 Si 4WS since 1997 and we used to have a 1988 S for a few years before and during that time. Just this year he purchased a 2004 WRX so he barely drives the Lude anymore...but it's still working and driving well.