1)Does your cold air intake just kida hang there, or is it connected by a bracket so it doesn't move around?

it has a rubber piece that does attatches to the body.. such as the bracket you are talking about...

2) Does your CAI rub against the newly created 'hole' in your car? If so, what do you use to prevent this?

yes it does... bicycle rubber will fit well to prevent the CAI from rubbing on the metal and scratching.. but in some cases you will need to hammer the hole open... (or cut it out like mike did.. hehe)

3) My Filter hangs pretty damn low. It actually touches the bottom of the car. Is this bad?(For air flow etc...)

no it is not... b/c of the "stone guard" it will still somewhat protect the filter and that is where the air comes from with the orignal intake.. that's another reason why you bought the cai instead of the short ram.. the short ram stays in your engine and just sucks up the hotter air in the engine bay..