I nomally call my skins something like - PortalHome or PortalMain or PortalAdmin -
Don't call your skin skin.html - give it another name.
I've created a 20 minute video that explains about skinning - packaging, how to install, how to zip up and how to apply them, while it doesn't answer all your questions, it will help you understand the methodology using in DotNetNuke skinning - it's worth looking at.
No you can't test your skins locally in the exact format as you would in DNN. The issue here is that it's not going to show an error until it's installed in DNN is it, so while you think something might be right, it is in fact incorrect but you didn't know till you uploaded it..
You know how you set the skin for you site - you can do via Admin/Settings or Host/Settings or Admin/Skins or Host/Skins and apply them, but it's in the Admin/Settings that allows you to apply a skin to the whole site - and to the admin section only.
There is a zip file in the DNN-blue folder that you could copy to another folder, unzip and look at structure.
You have alot of questions, but honestly - spending a bit of time viewing this 20 minute video will surely answer many of your questions and thoughts.
Nina Meiers