1) I think the Hulk turning chicken shit does two things. First, Thanos with gauntlet was nerfed quite a bit for the movie. Beating down the Hulk decisively was probably the only way to establish he's still very formidable. Second, in the aftermath of the comic Infinity Gauntlet, the Hulk is shrunken down to bite size and has a few adventures in the sewers of New York. This is just a less dumb way to take him out of the action. Thanos's goons wouldn't have been much trouble for a non-emo Hulk.
2) Yes Star Lord shat the bed.
3) That's what Thanos said so I guess I believe him. Again he's nerfed. Comic Thanos + Infinity Gauntlet knows everyone's thoughts before they know them and can't be touched unless he allows it.
The stones are way more powerful than a Watcher. The infinity gauntlet puts you in full control of your universe, but not every universe in Marvel's multiverse. In the Marvel hierarchy this puts a being with a fully blinged out gauntlet somewhere below the Living Tribunal but above Marvels' other cosmic entities including Galactus. In the comics where cosmic entities do more stuff, Thanos imprisoned most of them with the gauntlet. He briefly replaced Eternity itself, which I guess is like becoming the Universe. The limits of the Infinity Gauntlet stop when they bump up against the Living Tribunal. This is a neutral entity concerned with keeping some kind of order in the Multiverse. You have to start lawyering with them if your ambitions get too big.