1.) I would say try to save up for a Ghoulbane (which also kind of answers number 2). If you find a good deal you can get it for 600pp. Don't pay higher than 800pp, though.
However, since you're going to be hunting in Unrest for a bit, you may not get enough for a Ghoulbane any time soon. So read below!
2.) Honestly, I would just say Ghoulbane for lower to even 40s~ (as stated above), especially for lguk hunting. I suggest maybe a Bone Bladed Claymore or Blackened Iron Bastard Sword for cheap magical 2 handers. Some cheap magical weapon to get you buy for now. Although, a Gignatic Zweilander
http://everquest.allakhazam.com/db/i....html?item=409 is also a good alternative which you can probably get for maybe 300-350.
3.) Yes it is magical. This actually would be a fairly OK weapon for your purposes.
Just trying to remember what I did on live as a poor Paladin haha.