HI Jerry,
1. Those are balanced line level analog.
You can use TRS balance 1/4" or XLR balanced. The analog inputs use a XLR-phone jack combo connector.
So either XLR or 1/4" are possible on the one connection.
2. Yes you will be plugging the ADI-2 into the digital SPDIF connections of the MOTU.
So if you want to record or playback stuff though ADI-2 you will assign your softwares inputs and output to the SPDIF channels.
3. The ADI-2 is just adding an extra set of analog I/O to the MOTU.
So if you have 1 or 2 nice Mic Pre-amps then you plug them directly into the ADI-2's 1/4" or XLR inputs.
If it is an analog compressor and you are only using to compress your vocals on the way in then you just need to put it in between the Mic-pre and the ADI-2.
If you are trying to use the compressor on a mix then it gets more complicated. You would either always have to unhook your Mic pre in order to use the compressor, use a patch bay of some sort. If you are wanting to make full use of your external compressors and Mic-Pres and have them plugged into a better sounding device then I would just replace the MOTU with a Fireface 400, 800 or UFX. Any of these will have more and higher quality analog I/O than the MOTU and you would technically not really need to use the ADI-2 sense the AD/DA on the Fireface series is excellent.

Chris

Hi Jerry,
Technically not as good as the ADI-2 but way better than MOTU and better than most any other audio interface IMHO.
I think you will hear a noticeable sound quality increase with either the ADI-2 or the Fireface converters.
Chris

HI Jerry,
Yes.
For best results set the ADI-2 to internal/master and the MOTU to slave via the SPDIF.
Chris