#1 No the temporary and short load will not burn it out. It will simply ramp up to full output for the few minutes you use the thruster. It can run at full output for a while before it gets too hot. The few short blasts are not harmful. That said it will need to recharge the battery afterwards and this load, if long enough, could cause it to over heat. You will need a large battery or two to handle 500A for more than 15 seconds or so...

#2 I would not do this. If it pops and the alt is loaded you will blow the diodes.

#3 No need to protect the diodes unless you plan to load disconnect. The short bursts of full output should not hurt it. Often these Volvo alts are Valeo and they are often internally temp compensated meaning that when they heat up they reduce the voltage which in turn reduces the current and cools the alt.

#4 No it does not need any further protection......