1. Yes. You are seeing SpeedStep in action. You CPU throttles back automatically to an X6 internal multiplier when the CPU load is low, then jumps tp full speed when the load increases.
I would estimate that you have a good chance to exceed 3.3 GHz.
The G31/G41 is an economy chipset with a limited FSB freq. Upper limit is about 340 - 360 GHz depending on your particular motherboard.
Here's the guide you need.
Shadow's Gigabyte motherboard OC guide:http://www.tomshardware.co.uk/forum/page-245679_11_0.html
It's for an EP35-DS3L but all the Gigabyte Core2 BIOS's are similar. The G31 will have fewer options.
Go through the guides. Then take your core voltage off Auto and set your memory voltage to factory recommended values. Change the System Memory Multiplier from AUTO to 2.00. You need to set the Memory Frequency to twice the FSB. Then when you increase the FSB, the memory clock will rise in in proportion with it. At an FSB of 266 MHz, your memory clock should be at 533 MHz.
Now you can start the "test, increase core voltage, retest" cycle while running Prime95 to load the CPU cores.
Don't worry about trying to overclock your memory. The possible gain is not worth the loss of stability.
Keep your core voltage under 1.45 volts and your load temps under 70 C.
One of my G41's will run at 352 MHz, but not 353 MHz. It is stable at 3.87 GHz with an E6500.
The Wolfdale CPU's are pretty efficient An inexpensive cooler will take you to the limits of your motherboard.