Puffer can encrypt any kind of file. It does not distinguish between types and treats all files as just a collection of bytes.
You can't. The password is never stored and there are no backdoors in Puffer. You will have to remember your password.
Yes, the U.S. government finally relaxed most export restrictions on encryption software. This applies to all countries that the U.S. has normal trading relations with. All versions of Puffer now contain the full strength encryption algorithms.
No, Puffer uses a different set of encryption algorithms and file formats.
Install the Puffer 3 Decryption Module available on the main Puffer page.