1. The upgrade assistant detects which OS architecture you are currently using (not what the hardware in your system is actually capable of), and upgrades you to the corresponding version of Windows 8.
2. Yes, the .ISO image file you download for later use (should you choose to go that route) is bootable. It will operate like the install disk of any previous version of Windows that you would boot from to install Windows on your machine.
As for people having issues with product keys, I have heard of this as well, but it was specific to upgrades to Windows 8, not those done via clean install (an upgrade was performed and the key was accepted, but did not activate after the upgrade was done). Either way, you should be able to contact Microsoft if you use the Upgrade Assistant and run into a problem with the key after the install is complete.