1) Sure, but I probably wouldn't bother. Say you have $9,999.99 in VTSMX (because if you had $10k or more you'd already be in VTSAX) with an expense ratio of 0.14%. If you moved that to VTSAX, with an expense ratio of 0.04%, you'd have a 0.1% lower expense ratio. In a month that would be a savings of $9,999.99 x 0.1% / 12 = $0.83.
2) The number of shares you own will change, but the total value will not. For example, on 4/12 VTSMX was $72.32/share so the $9999.99 from the example above would be 138.274 shares, while VTSAX was $72.35/share for a total of 138.217 shares. Other investor/admiral class pairings may be more different. Regardless it doesn't matter -- the total value of your holdings won't change.
3) Yes, the only difference between investor and admiral class shares of Vanguard mutual funds is the lower expense ratio on the latter than the former.
1. If you want to. Depending on how much you have there (I assume about $10K, that was the threshold for Admiral last I looked), you might save a few nickels to a few dollars in fund expenses.
Vanguard has closed investor class mutual funds to new investors and lowered the minimum of admiral class shares to $3000, which is probably what has prompted to message Vanguard sent the OP. PS - Congrats on your 2000th post :-).