Will sdcard0 be encrypted on HTC One XL?
Too many questions btw but the answers are follows :

Ans 1 : Yes your /sdcard0 will be encrypted.

Ans 2 : No, if the /sdcard0 is encrypted you will not be able to access your storage in anyway.

Ans 3 : Yes, you will be able to update your cm but it will not be updated in seconds, it will take several minutes.

Ans 4 : Yes, all your previous data will be accessible. Data is lost only if you are installing cm for the first time, if you are updating it, your data will not be lost.

Ans 5 : Upto I know, you can decrypt your phone without factory reset but I don't know step by step process for decryption.