How to upgrade a harddisk in Macbook Pro
1) I would suggest using an external drive? Why? For the simple reason that upgrading the MBP SSD is expensive! It's not your standard SATA drive. A new 1TB SSD for that computer will run you ~$650 (based on OWC prices).

2)Your SSD Read/Write speed should already be around 400-500MBps. A new SSD's performance would probably not be noticeable. It is almost certainly not worth paying the $650 for just the speed boost.

3) I would suggest at least one (possibly two) backups. Note that if you buy your new SSD from OWC or if you get the OWC Envoy, you can plug your old SSD into your computer via USB, so having an extra (second) backup is less important if you take this route.

4) I'm not sure exactly what you mean here. You can use an external SSD as either a storage drive or a boot drive or both, but boot times from an external drive might be slower than from an internal drive.

Please comment with any questions or if you see any mistakes in my answer.