To answer 1) Simon writes

As we know, a lot of noise is currently being made about opening the aid floodgates to the Palestinian Authority again. Everyone seems sorry for the children of Jenin. Well, me too, I guess. But this time let's make sure the money goes to those kids, not Saeb Erekat's tailor. Or bowling alleys in the Village.

Daniel Pipes is a bit more emphatic in his most recent column, "Palestinians Don't Deserve Additional Aid":

Aid-wise, residents of the West Bank and Gaza have hardly been neglected until now. They receive about $300 per person, making them, per capita, the world's greatest beneficiaries of foreign aid. Strangely, their efforts to destroy Israel have not inspired efforts to crush this hideous ambition but rather to subsidize it. Money being fungible, foreign aid effectively funds the Palestinian Arabs' bellicose propaganda machine, their arsenal, their army, and their suicide bombers.

As far as the second question is goes back quite far actually.

With this capital, the PLO was able to start large-scale business enterprises. In Lebanon, it ran a conglomerate called Samad ("Steadfast") whose 10,000 employees and estimated $40-million gross revenues in 1980 made it one of the country's largest firms. The Popular Front for the Liberation of Palestine (PFLP), an organizational member of the PLO, achieved a near-monopoly over steel products in South Lebanon during the late 1970s by importing steel from the Soviet bloc at concessionary prices and paying no import duties (the PLO controlled the ports of Sidon and Tyre). Its factory, the Modern Mechanized Establishment near Sidon, undercut competitors and drove them out of business; then it raised prices and reaped huge profits. Many Lebanese believed that predatory pricing was integral to the PLO's plans to retain control over South Lebanon. In addition to its local investments-a hotel in Lebanon, a chicken farm in Syria-the PLO owns a portfolio of investments in the industrial states, including a disco club in Italy and an airline in Belgium.

That's from "How Important is the PLO?" by Dr. Pipes for the April 1983 issue of Commentary.
One thing is clear, revolution and terror were very lucrative pursuits for Yasser Arafat and friends. The money may not have helped the people it was supposed to, but it made their leaders very comfortable. Hmm. Do you think that Michael Moore would make a movie about the corruption of the Palestinians? "Bowling for the Mukhata" anyone?
Crossposted on Israpundit and Soccer Dad.