1. What exactly determines who is in the G1? And is there a method to who is in which block?
I don't think it has a method! They pretty much put their most important guys in two blocks and give this big matches to try and get more attention. It really is an important tournament and there are guys that made their name due to that - it's the Japanese KOTR let's say. Sometimes you don't really have qualifications for the KOTR Tournament, they are just announced, same here.
2. As I understand it you have weight classes in puroresu but in the G1 wrestlers from all classes are in. So for instance the likes of Devitt and Okada, wouuld never be able to face each other outside of the G1?
Well weight classes don't forbid Jr. Wrestlers from facing Heavyweights. The last title defense Okada had was actually against Devitt. However japanese in general don't like to see small guys facing that big muscled guys, specially in the last years when they really integrated MMA to their wrestling style.
3. Tanahashi... I'm confused as to his face/heel alignment. He spent Day 1 as a face but against Ishii on Day 2 he was a heel? What was the deal with that?
There is a reason people call him the "Japanese" John Cena... He's exactly like him, even with the fans. He has been dominating since 2006 and people got sick of him. When you are new, you'll find him amazing though because he is. They can't give you a logical reason for why some guys hate him, they just do it for the sake of it like with Cena. Well, Tanahashi got very popular because he was stabbed by his girlfriend xD
4. Is G1 strictly NJPW or are other companies involved?
Well this year yes. But Kota Ibushi is more known for his time in DDT, but that doesn't mean anything. I'm sure they can put some guys from CMLL is it was needed or people really asked for it.
5. During the matches I hear the ring announcer talking to (the audience) on the mic, usually after an exchange of moves or a near fall, what are they saying?
I think it's the time, but I don't know too to be honest.
6. What's with Shelton having an X in his name? Is it supposed to be reference to Malcolm X or something?
Wikipedia: Benjamin returned to New Japan on April 20, now working as a member of the villainous Suzukigun, teaming with the stable's leader Minoru Suzuki in a main event tag team match, where they defeated Kazuchika Okada and Shinsuke Nakamura.[92] On the following tour, Benjamin worked under the ring name "Shelton X Benjamin", playing off the fact that prior to him being revealed as the newest member of Suzukigun, Suzuki's partner had been billed simply as "X"
7. What is the deal with Yano holding a DVD to the ring? Is it something he's involved in outside of wrestling?
http://www.amazon.com/Wrestling-Toru-Yano-Shunen-TCED-1566/dp/B008CL0VK8
8. What would happen if, at the end, there were two people in Block A with the most points? Who would go through to the final?
You would see who won the match between them or as done in the past, have a decisive match.
9. What would happen if someone is injured with matches yet to compete in? Would it be an automatic win for thweir opponent or would no points at all be allocated?
When someone backs out of the tournament, their previously scheduled matches are turned into automatic wins for the opponent, meaning someone who was booked to lose initially now has a loss. It will all work out in the end, but the points structure may have to be altered to get the intended result.