Now in regards to your questions:
1) There is no hard line that content is judged on, and this is why it is currently a grey area. The law was set up to be flexible to different situations. Law suits are what usually determine the general area of this idea, as it then sets a legal precidence for others to use. In general though the courts look at the amount used in relation to the overall piece. An example from a recent court case:
http://en.wikipedia.org/wiki/Lenz_v._Universal_Music_Corp.
I believe the amount she used was 29 seconds of infringing content without permission. But again this is on a case by case basis.
2) I do not know the inner workings of youtube's algorithms, but those algorithms are the only reason that youtube still exists and is able to have content. Massive lawsuits were upcoming against youtube, and they would unable to police every single video, so they developed the algorithms as an alternative to the big industries. This also isnt related to fair use neccesarily, but the faultiness of the youtube system.
3) The wikipedia link I posted earlier gives an example of a 29 second video, but again this is case by case basis. I know most people say that youtubers dont have the money for a lawsuit, but this is the only way legal precidence is set in the current legal climate.
Don't misunderstand me, I think the DMCA is outdated in our current world of technology and internet that were barely in their infancy when the DMCA was created. Its just that in the current legal climate, youtubers that use large swaths of content without permission are working in a legal greay area. Hope this helps.