[uab9253]

1. Depends on how much of a riff is used. Key does not matter. Also depends on how aggressive the holder of the publishing rights wants to be. If they are just playing clubs or have a tune up on Soundclick or Myspace and not for money, they are probably ok.
2. Is sure is. Again, you can get away with some of that in clubs. But if it is on a recording being sold, it will be litigated if found.
3. They have to find the holder of the publishing rights of the song. Check Soundclicks rules on posting cover tunes for the best explanation of what you need to do.

and finally that band you mention likely is paying to do that. If not, they better pray...