Thanks for choosing ${project.name}! When you first install ${project.name}, no one will be able to do anything until you give permissions (unless everyone is an op). Because ${project.name} is largely command-driven, it has no effect until someone uses its commands, you can install WorldEdit and deal with configuration whenever you are ready.
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This is not a problem caused by ${project.name}. ${project.name} doesn't deny build permissions as it is merely a world editing program.
A common mistake is making a syntax error in one of ${project.name}'s configuration files (this is very fatal unfortunately, and can be caused by a single character typed in the wrong place). Try asking in IRC to see whether anyone can help you.
Yes, depending on what you are using WorldEdit with (Bukkit, Single Player Commands, MinecraftEdu, etc.). We don't guarantee 100% compatibility with all known custom blocks, but we have pretty decent support. Please be aware that support for these mods is considered 'experimental,' and will likely be for the far forseeable future.
You'll have to install our accompanying WorldGuard plugin, which works in conjunction with ${project.name} in order to protect areas. With it, you can make a selection with WorldEdit and then 'define' a region that prevents other from building in it.
Absolutely! We haven't documented how to yet, but you can try looking at the Javadocs for the plugin's main class. You'll have to get a reference to WorldEdit from Bukkit's plugin manager (don't try to create WorldEditPlugin), and then call one of its selection methods.
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Did you know that ${project.name} is open source? That means that you can read the code and learn from it, as well as modify it and submit back changes to help the community!