yes as long as its nothing that can be abused

Wondering, would it be possible to build a house basement, make it a long horizontal corridor with a set of stairs at each end, and each set of stairs connects to a different house?

Don't think so.

Guess that's true, but if both houses are on the same island, I wouldn't see that much of an issue. I mean even if it does permit you to move around a bit faster on the island, its not like there's anything to abuse on the kingdom islands. I wouldn't connect a Dustari house to a Forest house for example, only two on Dustari.

The problem is if one house falls conflicts occur.

That's true in a way, but don't the houselevels stay in the database even after the houses fall? So theoretically you'd just have a room that isn't actually contained in anything, it was just an idea, I'm not into the whole house renovating thing much anymore, but it was a neat concept that I came up with.

If this is correct and houses stay up, I think it'd be a really neat idea to allow. I think it should cost two times the price for the scrolls though, being allowed an extra permanent room.

Items in a house level do, but the levels themselves do not.

I'm working on making myself a house (main floor, second floor and basement, all custom levels) and I had a quick question. If I add a furnace, crafting table, etc to my house from the graal2002 insideobjects (now that we're allowed) will it work automatically, or does it have to be an NPC or some kind?

So it is allowed, but I don't know if the image alone will allow it to work.