1) HA should work fine with this configuration
2) There's advantages to having a direct iSCSI connection to the storage, however then you're depending heavily on the xen machine filesystem and you won't be able to have the same iSCSI volume mounted on both machines if you're not using a clustered file system (CFS, GFS, the likes...).
NFS on the other hand can be a bit hard to maintain but easier in the end, if I were you I would go for NFS for starters and see if that fits your needs, and then maybe do an engineering project on how to do a clustered filesystem with iSCSI volumes in the future
3) iSCSI multipathing is a technology in which you have more than one "path" to access your iSCSI storage (two controllers, two ethernet cards, two different cables, so more than one way to get there), with multipathing you define all the ways you can get to that storage and your machine will then create a virtual disk device which will be a representation of the iSCSI volume through any of the possible ways to access it, if for some reason that preferred path goes down multipath will automatically try to pick another one until it gets out of options.