Martin Dougiamas

Correct - you can not drag a folder into Moodle.  This is actually a restriction of the browser technology, not Moodle itself.  There is no way we can implement support for that until the browsers support it.

You absolutely don't have to put a php.ini in every folder. Usually there is just one for the whole Apache server.

And the favicon issue is here:  MDLSITE-1860   (It's not Moodle, it's something to do with Cloudflare we think)

Release notes are a pretty definitive place to find them, under the API changes section.

If you are using a browser to do the upgrade then it really depends on how large and complex your site is.  Some browsers just choke after being open for hours.

Most sites should be fine to go straight from 1.9.x -> 2.2.x but for larger sites we really recommend you use the command line upgrade.   http://docs.moodle.org/23/en/Administration_via_command_line#Upgrading_via_command_line

Moodle code assumes full URLs all the time (because it re-uses text in all kinds of ways) so even if you hack the code in that one spot I'd be surprised if it works properly everywhere.

If you are using Moodle 2.x or later then all your images should actually be part of the fileareas that belong to the HTML text, and Moodle will move everything around properly all the time.