1. It couldn't play Master System games on its own, but an add-on (the Power Base Converter) was released to allow backward compatibility.
2. Phantasy Star series, the Shinobi series, Shining Force I, II, Landstalker, Strider, Theme Park, Micro Machines '96, Cannon Fodder, Soleil, Rocket Knight Adventures, Sparkster, Dynamite Headdy, Herzog Zwei, Flashback, Talmit's Adventure
3. Worth is subjective. Personally I say it's a decent deal.