I was not going to count white, but transparency is not a real color(I mean you can't color with it)
Yes.
It is counted as a color by hardware, as the "alpha channel." And you can color with it, ie: negative space.
Technically yes, as it has to be used to be displayed properly, although as far as the piece goes artistically it has been restricted to 4 colors.
I think the highlight of the green (defined by the red dither on the other side) should be coming from the opposite direction to fit with the direction the source seems to be coming from.