I'll take quick stab at #1. From a outside point of view, you really want your paladin to be a strong fighter. He's big, he's tough, he knows how to use his weapons effectively. He's got those great saves. He's one of those guys that needs to be in the front lines bashing heads and kickings evils' tail.
From a characters' perspective though, that leaves you lots of options. Alot is going to depend on his relationship to his diety and how he follows that ethos. Ilmater, unfortunately is not a god I'm familiar with, since I play in a unique world with a unique pantheon of gods. If your god is proviolence, and a kind of take it to them god, you'd probably lead off every battle with a charge and run headlong into the teeth of the bad guys. If your god is one of healing, then you might have him move as a flanking attacker, giving him the ability to pull out of an egagement and move to heal any fallen or overly injured party members, while still taking apart the bad guys a piece at a time.
Personally, I'm playing a paladin, who follows a more defensive stance. He doesn't make the first attack, but he does make the last one. He's got the attitude of, "I'm drawing a line in the sand, and you shall not pass". Then he waits for the bad guys to charge him, instead. If they do, they get beaten severely, since he's in the finest armors and shields available, and thus nearly impossible for monsters to hit. If the bad guys flee in terror, thats ok too. It just gets them out of the way so he can continue his quest. Its really just going to depend on how you want him to behave in combat.
#2 and #3 - As for party member reactions, I'm going to agree with wolf. He should be confident in his beliefs and he's not afraid to share them. After all, he's in the full favor and blessing of his diety and his abilities and powers show it to the world. That kinda thing is bound to go to your head a little. That doesn't mean he's an evangelist, mind you... but a case could be made for that mode also. He'll get along with most anyone with a good diety, and neutrals and he will probably never be close friends, but will work together, so long as the means AND the ends justify the paladin's involvement. Once he knows that one of the group he's around is evil, he will refuse to work with them, unless they are seriously trying to reform and be good. But, at the first hint of evil activity, he will confront them.
#4 - As for the opinions of your specific paladin, those are left open to interpretation. Just because Ilmater likes muffins and children, your paladin doesn't have to like them too. Its just kinda recommended. Then there are the eternal questions of... what type of muffins? He might really approve of blueberry, and hate strawberry. He still likes at least some muffins. Same goes for children. And anything else for that matter. Your gods likes and dislikes are kind of a road map to your everyday life and activities. They don't share the exact same beliefs, likes and dislikes however. After all, there are a few thousand roads that will take you to the same destination. They just might have a few more twists and turns involved. In the end, it again comes down to how you want him to be, and then justifying it in terms of his life, his god, and his code. Then sticking to it of course, as any good DM is going to challenge those opinions.
Hopefully, this will help out a little bit. I've really enjoyed playing my paladin. He's been a fun experience. Hope you enjoy playing yours too. Paladin's are a little limited in the options they can use, and so forth. But, they're fun to whoop up on evil with.