1.-2. Yes, fantasizing is a form of craving and can be worse than mere sexual activity. It simply depends on the reason of why it is done. Such as wanting to release the build up of pressure caused by the accumulation of certain fluids within the prostate gland. The difference being "aversion" instead of "lust".
Fantasizing can be very consuming, addictive, and will incline the mind in a much more forceful manner than the occasional aversion of wanting to get rid of the tactile sensation. Ideally, both should be abandoned.
How much a simple orgasm will affect the path, will depend on the magnitude of craving and clinging, or delight in such things.
- Yes it's quite possible. If suffering and the path leading to the cessation of suffering is not understood, and not practiced accordingly.
The path is neither indulging nor rejecting, neither passion nor aversion. Unfortunately, it is not an easy path. It is quite simple but it deals with the ultimate, mere intellectualization cannot get us very far. All which is wholesome and unwholesome must be known and seen directly, with insight. We cannot obtain peace by forcefully suppressing and rejecting.
You can advance at a slower pace, smoothly, or you can go all the way. The choice is yours.
But, for how long will the right conditions for practice remain? The path of Dhamma leads to the complete cessation of all suffering. So great is this reward, it cannot be compared to anything else.