1) If you convert your IRA to Roth you will owe state and federal tax just as if you had earned that money in the year of the conversion. This is not a backdoor Roth, this is a conversion. Since your tax rate will likely be lower in retirement (maybe not, but probably) this isn't a great idea as it means you'll pay more tax now instead of less tax then. You may still want to do it as it would let you contribute to a backdoor roth (we'll get to that later), but maybe your wife shouldn't since she has a larger balance. You might check to see if either of your 401(k) plans would let you roll the IRA into them. Even if they won't let you roll in IRA contributions they may let you roll in rollovers from previous a previous 401(k). This would let you proceed with a backdoor Roth without paying tax on your current IRA balances now.
2) Yes, all contributions (including conversions) and the gains on those contributions in a Roth IRA are tax free in retirement.
3) Yes, the current limit for those over 50 is $6500 per person as long as you (or your spouse) has at least that much earned income. (edit: right, as EvenSteven said, you're right about the limit, but your income probably means you can't contribute directly to Roth).
4) You can also have a traditional IRA, but the contribution limit is combined between them, so only $6500 total for each you and your wife.
5) From what you've described (and I could be wrong), I think you may not quite understand what a backdoor Roth IRA contribution is.
As you've said, you're over the
income limits to be able to deduct IRA contributions from your income. You can still contribute to an IRA at any income, but this would normally be a bad idea since you won't get a current year deduction, and you'll pay tax on the gains at normal income tax rates, which are higher than capital gains rates in a regular brokerage account. As you'll see this ability to contribute at any income can still be useful.
As you've also said, you're very near (likely over) the
income limit to contribute directly to a Roth IRA.
As you've also said, IRA balances can be converted to Roth IRA. What you haven't said is that if the IRA contribution was not deductible when you made the contribution (as would be the case if you contributed this year), you would pay tax on the gains since contributing, but not the original contribution. What this means is that you could contribute to your IRA (anyone can contribute, only those with low enough income can deduct the contribution), and then immediately (before there are much if any gains) convert to Roth thereby essentially making it as if you had contributed to Roth in the first place (even though your income won't let you contribute directly to Roth).
The complication comes from the fact that you have existing previously deducted IRA balance. As you've said, if you convert previously deducted IRA balances (including rollovers from previous 401(k) plans), you'll owe tax on those conversions. What you may or may not know is that if you make a non-deductible contribution to an IRA and convert some of your IRA balance to Roth, the conversion is considered to come proportionally from the deductible and non-deductible balances. So, if you're wife added a $5500 non-deductible contribution to her $50k balance and then converted that $5500 to Roth, about 10% would come from the non-deductible contribution which would not be taxable and about 90% would come from the previously deducted balance and would be taxable.
So that's why this would all be great if you had no current IRA balance, and maybe not so great since you do. So the first step is to see if you can get rid of the IRA balance by rolling it into your 401(k). If not, then you need to decide if paying the tax so that you can make backdoor roth contributions for yourself (maybe since you have a small balance) and you wife (probably not since she has a large balance) in the future makes sense.
This might help:
https://www.whitecoatinvestor.com/backdoor-roth-ira-tutorial/