Family Sharing - Combining Accounts

I have a family with a large collection of Apple devices. I have some questions about Family Sharing. I have read some of the documentation on the Family Sharing pages but it does not really answer my questions.
Due to some legacy items, we have basically two iTunes Accounts (three if you count one my daughter set up for school). I have one account (with some purchases) & the others are listed with my wife. This has the majority of purchases via iTunes. There are also some purchases on my daughter's school account.
Just recently, I reconfigured our iCloud Accounts to individual accounts for each family member. This was "required" for the changes brought about by iOS 8 & the changes with Find Friends App (need a separate iCloud account for each person). This has worked well.
Now for Family Sharing. I started it off my sending out an invite to my wife, which was accepted on my son's iPhone. Now, my wife is now my son according to Family Sharing (if this makes sense). It appears that I need to set up a separate iTunes Account for each person in my family. Before I go too far on something that I need to back out from (especially considering that everything is working OK at the moment), I need a heads-up on some questions:
Do I need to set up a separate account for each family member?
Since I have already created an iCloud account for each family member, is the iTunes account already created or do I have to create it separately?
Does Family Sharing work off the iTunes Account or the iCloud Account?
Once I have created an iTunes Account for each family member, I set up the Family sharing account under my iTunes Account & send an invite to each family member
Once they have accepted, then we can share iTunes purchases
This mean that my daughter (for example) will be able will be able to download the purchases we have already made under my wife account, even though she is logged on with another iTunes Accound
I will also be able to download the purchases made under my wife's iTunes account (even though I am the Family Sharing "organiser)
Finally, a question about synching with a iMac. I want to synch each device with just one computer in the house. Will this work? Each device will have separate iTunes account. Currently, there is the message about authorising for the iTunes account. What happens when there are multiple devices set up to synch on one computer. Is there anything special I have to do to get it to work (if it does work)?
Some detailed questions, but I have not been able to get clarity on what needs to happen.

I'm afraid that aliases remain tied forever to the account which created them - you can't move them to another account nor turn them into an actual account.

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    (125941)

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    http://support.apple.com/kb/HT4895
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    http://support.apple.com/kb/HT201085
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