1.
DVC owners buy timeshare pts and can't use them. so they can book a stay with those pts and rent them to others.
you would not actually rent "pts" as you cannot do anything with the pts - member services would not even speak to you to discuss the reservation. (but you can check the website for wdw stays to make sure your reservation is there.)
the DVC owner still controls the reservation until you check in. you cannot call to make changes or add the dining plan or whatever without going through the owner.
the biggest issue is usually that the rental is FINAL and there are no refunds. an owner might try to work with you to change the dates but they don't have to so make sure your dates are FIRM.
2. usually.
there have been rare cases of fraud. but if you do your homework, you can minimize the risk.
and if you rent from david, he holds back some of the money in case the reservation is fraudulent, so there is some protection there. you can read more details about how renting works at his website:
https://www.dvcrequest.com/
3. i did it directly with a DVC owner here on the DIS. i didn't like worrying if the reservation might be canceled out from under me, but i found the owner with google and felt comfortable that it was real. but after that, i bought in so i could control my own reservations.