My MM is in HKU. and I stay my whole summery there this year, so let me tell you:
1) to get HK visa (permit) is relatively easy from either HK gov or Main land gov. For visitor visa, just 10 days plus 10-20 bucks is OK.
2) for your visa type, you should ask HKU to apply your permit/visa for you. They will mail you some forms and you just fill the forms and mail back. You should NOT need to do any other things. I did something similar before last year but cancelled the trip because of SARS.
3) even with main land passport, when across HK border, not a single problem. I do not know why some people say "刁难"? Be decent of yourself and there will be no problem.
4) RMB are welcomed at many stores including some grocery stores (though the convertion ratio may not be perfect for you).