1. City, definitely.
2. Anything works, really. Just pick a Japanese word/term and pin 'Academy' or 'High School' to the end.
3. Skip it. Doesn't serve any purpose, really. It doesn't really introduce our characters to each other since generally you're all assembled in the gym and have to listen to the speakers, not talk to each other. We can always have flashbacks and stuff. "Hey, remember that time in the opening ceremony when you..." Etc.