It begins with the intention of the mind, with the idea that the mind can be extended beyond the boundaries of the body...thus internal energy becoming external energy.
Absolutely. It seems that I should hesitate to mention ki on this forum, but that's what I would call it
Bodily contact alone is of less importance. The moment of contact is when uke's intention is directed toward tori, and it is kept even when there is no physical contact, because of intentions meeting.
I find that more and more through the years I focus on intentions in my aikido, and less on the physcial mechanics.
About internal and external energy, it's all the same to me - the energy is the same, anyway, wherever it is moving.