#1 You can burn pictures and text
#2 Yes, they are about 2x the cost of a regular CD/DVD disc.
#3 ImgBurn is free. They only ask for donations.
#4 the .cov file is a cover file. You'll need a cover designer to make a layout for the disc. Once you've designed a cover layout, you'll flip the disk upside down in the drive. Simple layouts with text can take just a couple minutes. Full picture HQ covers can take 20-30 minutes. You can also find covers online. This is what they look like when done:
Below is the FAQ from the lightscribe site.Creating a LightScribe Label
Burning a label with LightScribe is easy.
To start, you need to run LightScribe-supported labeling software. The label software often can be launched as a separate application that is included with your data burning application suite. Depending on the labeling software you use, you can create a label before or after you burn the disc content.
NOTE: To burn a label, you must flip the disc over and place it label-side down in the drive tray.
NOTE: LightScribe labels are monochrome (grayscale) only.
Labels can be a simple title, or you can get more creative by adding backgrounds and images. The capabilities will depend on your labeling application. The following step-by-step instructions will help you create your first simple LightScribe label using various LightScribe-supported labeling software. Refer to the documentation of each application for details on all of the available features.
NOTE: Specific instructions steps may vary depending on the software version.
Some Examples:
Sonic Express Labeler
Nero Cover Designer
SureThing CD Labeler (SE Edition)
Roxio Easy Media Creator