Using Itunes Match as backup

I have a dilemma, I have over 80GB of music on my computer and I want to free up some space. I am looking at using iTunes Match as storage for my music instead of having it on the laptop but I have a couple of questions about it?
1. Once it is all uploaded to Match, if i delete it from my hard drive will iTunes still work or will it be constantly be looking for the physical files.
2. If I can delete it, how do I upload new music I acquire, do I have to physically put it on iTunes, then upload and then delete?
3.  How does it work with my iPhone as I will never have the capacity to load all my songs on the phone.  Is it easy to select an album or genre at a time to download to the phone?
Thanks in advance for your help

FAQ:  Why iTunes Match can NOT be used as a backup!
1. Yes, the service will still work.
2. As new music is added to the iTunes library iTM will automatically scan and either match or upload the new tracks.
3. Tracks can be downloaded by Album, Artist or Playlist.
If you do decicde to delete the music from the computer's internal HDD you need to have a local backup scheme in place to store the tracks and backup any new tracks that are added to the library.

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