Does the wireless in the controller turn off, and instead does the input go through the usb? This would be similar to any wired PS2 controller, for example. OR is the wireless still on, while the usb only recharges power?
I think it is still wireless when plugged in
As far as I know, the Bluetooth is off when it's plugged in so it controls through the USB, because when you unplug the controller it resets and syncs with the system again after a few seconds. It's clearly capable of operating via USB because it's possible to plug a Dualshock 3 into a PC and use it as a PC gamepad (provided you download MotionInJoy).
No you can not use a ps2 controller because there is no place to plug it into. Well unless you want to pay for an adapter. The ps3 controller pretty much is the best controller ever. It is similar to the sony controller we all know and love but yet, it's so much better. Wireless is awesome but the battery wares out fast. But that's okay because it also charges very fast. It takes 30 minutes for my ps3 controller to get charged. SixAxis is amazing and improved L2 and R2 buttons. And yes it does come wth a charger