1) Yes the source code is available. User:Eran has posted it here https://github.com/valhallasw/plagiabot
2) This bot ONLY works on new edits within a couple of hours of them occurring. This reducing the number of false positives. It DOES NOT look at old edits.
3) This requires human follow up and common sense. One needs to make sure that a) the source is not PD/CCBYSA b) that it is not wiki text that has been moved around c) that the authors of both are not the same, etc
4) True positive rate is around 50% which is from my perspective good / useful. This bot has flagged a lot of copyright issues would have been missed otherwise.