1) No, you can't hide ancestors and still have the leaf nodes show up. You can, however, assign the table that represents the "level 3" data directly to the DataSource property. For example, in the Northwind Customers->Orders->OrderDetails example, instead of assigning the DataSet to the DataSource property and "Customers" to the DataMember, you would just assign the OrderDetails table to the DataSource property.
2) I'm not sure I follow this; you can hide columns on any level, so the answer to this question if I understood it is yes, you just set the Visible property for the column in that band.
3) Right here.