I did a little more digging and want to share my findings, plus I'll provide simple explanations and pointers.
For my original question/concern #1 - I read the code that Stratux uses and the code Avare uses and can say pretty confidently that the altitude difference that is shown on Avare's main page (Location View a.k.a "moving map") is the target plane's reported Baro altitude against the "own plane's" reported Baro altitude. At least for my Stratux which has the AHRS/Fan add-in. Boring details follow, feel free to skip down: ADS-B broadcasts may show Baro pressure-altitude or they can show GPS derived altitude. There are different ADS-B message headers, and messages #17, #18, TIS-B, Transponder Mode C and Mode S messages all have "Baro" altitude in the message. Messages #22 - #24 contain GPS derived altitudes. ADS-B messages are converted to GDL90 messages when being sent from Stratux to Avare. The GDL90 messages report altitude as "Baro" - so that's what Avare deals with. The best "memo" I've seen describing the ADS-B message contents and evolution from the days of Mode A transponders is "The 1090 MegaHertz Riddle" by Junzi Sun. The GDL 90 protocol messages are in a Garmin document, "GDL 90 Data Interface Specification." Both are easy to find online.
For concern #2, the Location View of Avare has "Corner Text" on the top of the page showing "MSL ft". Although my "own plane" information is available and accurate, when Avare prepares the text for the "infolines", a fresh altitude is fetched from GPS parameters. So, Avare is showing a GPS derived altitude MSL. I would recommend to the Avare developers to use the baro altitude when available instead since that's what pilots can see when they fly, and the traffic altitudes are also "baro". Boring details: you can see the additional fetch of altitude in the "infolines" JAVA under "utilities" - around line 445 you will see mAltitude being reassigned to a GPS value - getGPSparams().getAltitude .... I would rather have the baro altitude shown on that location view as it would match the PFD page reducing confusion. Or at least change the text to be "MSL ft baro", "MSL ft Geoid", or "MSL ft WGS-84" depending on its source.
For concern #3, The PFD page is showing Baro altitude on the tape. That's fine, leave it as-is. Boring details: My Stratux has the AHRS/fan controller add-in card, which many other people may have too. With this card installed, there is more information than just traffic being provided to the Avare. Additional info includes Baro and GPS altitude at finer resolution, orientation in 3D space, etc. I added the ability to "set the altimeter" on my Stratux so the Baro altitude will match my sensitive altimeter's display. I can reset to 29.92 inches to get back to "pressure altitude" at any time. Yes, I know that without a good static pressure source and calibration I should continue to rely solely on my IFR cert sensitive altimeters when necessary.
And as for Avare's display of altitude as "PrA" - I like to think of it as a reminder that my altitude isn't know to Avare at that moment. Altitudes shown are directly from the ADS-B/TIS-B messages which are Pressure Altitude. When my altitude is available to Avare, the display changes to show the "difference" in altitude above or below me with a + or - sign and at least two digits of altitude in "hundreds". See the code in the "Traffic.Java" file around line 167.
DrLin