2.- Around one million during the week, sometimes higher on weekends. Yes, as long as you drink the filtered, boiled of bottled water that the family will have in their home. Ranging from the 60s and 70s in the winter to the 80s and 90s in the Summer. In the Summer is frequently rains in the afternoon and early evening hours, and can be a little cool for shorts.
Many people wear shorts.
You can cash traveler's checks at any bank or casa de cambio. Obviously it depends on how much shopping you want to do. Traveler's checks are safer and can be used to obtain more cash later. You will need Mexican pesos for taxi and bus fare when you arrive, and for snacks. It is not absolutely necessary, but it may be convenient.