1) Not really nirvana, so much as a constant stream of maniacal laughter. Megaprojects are my favorites, though, when I manage to do them correctly.
2) Genesis is the best. I'd say another good one that's still DF is Fortress Defense. For total conversion, Corrosion is good. I haven't tried many other mods.
3) My most important point is to make sure my dwarves live through the first year. Second most is to stick with the fortress theme, or goal. Past that I rarely care. I've gone upwards of 7 years on a fort without any meeting area designated and only communal beds.
4) Okay, here's my standard loadout, in spoiler'd form:
Dwarves
5-point miner
5-point miner
5-point mason; or 3-point mason, 2-point mechanic
3-point woodcutter, 2-point carpenter
3/4-point grower, 1/2-point cook or plant gatherer
3-point brewer, 2-point grower
Other. Ususally I have this dwarf as a 5-point hammerdwarf.
Supplies
2 copper picks, one copper battleaxe, one silver warhammer if needed
Seeds: 30 Plump Helmet, 20 everything but dimple cup and quarry bushe
Drink: 20 wine, 30 everything else
Food: Somewhere around 20 different kinds of meat foods; everything bumped up to two, actual meat bumped up to four. Four of each fish.
Anvil, sometimes; the cheapest I can get. Depends on whether or not I feel like getting one.
2 dogs, one male / one female
2 cats, one male / one female
6) Most horrible: Let's just say I have the post about it copied and saved very far down in my folders, named "The Incedent." If anyone knows what I'm talking about, you'll understand.
There's also mermaid farming, children waterfalls, and the like. Most horrible I've done is probably dropping baby turkeys, as they hatched, dozens of levels over my main entrance, to splatter everywhere, just for the hell of it. Anything worse I've probably shut out of my mind by now. I'll see if I can remember anything more fun.
As for installing Genesis; I haven't used the LNP, so I don't know what could've gone wrong. Try installing it in vanilla, following the mod's directions, unless there was something else in the LNP that you wanted to use.
As for butchering babies, you'll have to change some of your dwarves' ethics. I don't know exactly what you need to change; might be worth asking in the Modding section.
If you want to ride goblins, they'd have to be radically changed. You'd be better off making a new race of rideable goblins.
And welcome to the posting madness! Hope you enjoy your descent.