1. Magnum was hand-picked by Flair to "inherit" the NWA World Championship. Garvin was given the title because nobody else wanted to be "transitional champ" for the couple months leading up to the Starrcade where Flair regained the title. Garvin was the only one who agreed to take the title at that time. Magnum was supposed to take the torch from Flair and "carry" the NWA.
2. Nikita would have remained a heel, I believe, and been elevated to number one heel and Magnum's main rival. Nikita was as over as Magnum was. It would have been a helluva marquee rivalry for the NWA at the time, especially given the political "mood" of the world, with the Cold War ending and Reagan and Gorbachev trying to make peace between our countries. Nikita likely would have continued the old anti-USA Russian mindset.
3. Without doubt. Magnum was the hugely popular babyface "working man" and Luger would have been the arrogant "superman" heel. Big business right there. Not too dissimilar to the Cena - Batista rivalry of the recent past.
4. Sting would have eventually become the "franchise" and top guy anyway, it just would have taken a little longer. Magnum was VERY popular but he was perhaps a little TOO "southern". Sting had more universal appeal and would have been passed the torch eventually.
5. Nope. Dusty Rhodes and Magnum T.A., the one constant in the "Horsemen"-era NWA. Others floated around this angle, some siding with Rhodes and Magnum, some siding with the Horsemen, but it was always Dusty and Magnum against them, trying to run the Horsemen out. I'd no more picture Magnum joining the Horsemen than I would Dusty.