I think generally it’s a great idea to adjust your resume/CV to the job you’re applying for. After all, you might have experience in dozens of areas, but if half them don’t matter to your new employer, why talk about them at length?
I’d list the relevant experience and where you gained them based on the job you’re applying for. Then the rest can go either bulleted or in some other short form at the end, so they can still see your full working and educational history, and all the information relevant to your potential employer is right up front, easy to access.
Nobody is going to read pages and pages. You need to grab their attention with the first couple of sentences.
So, having said that, here is what I would suggest.
Challenge #1: Yes, add the new experience as well and keep the old, but make sure you precede all of that with a couple of paragraphs of the experience that’s relevant to the job you’re applying for.
Challenge #2: Again, keep your full working experience in, but in the first couple of paragraphs, which are relevant to your specific job application, you can list the companies where you gained the experience required for the new job. Something like: “I have got two years’ experience as Super-Admin-Overlord-Technician from my work at Acme Ltd. and Widgets Ltd.”
Challenge #3: References are very important once the new employer has decided you’re the person for the job. It’s all well judging you by your resume/CV and asking you to complete tests etc., but companies will want someone else to vouch for some of your experience as well. Personal contacts can work, but only if these people can reasonable be seen as authoritative on the experience they’re vouching for. If you fixed someone’s computer then they might be able to confirm that you’re good at fixing computers, but if you built a website for someone who doesn’t have a clue about websites, that person won’t be able to confirm that you’re a great ASP.Net programmer.
Ultimately be honest though, rather than try and find references that turn out not to be plausible.
Challenge #4: As before, I’d do two paragraphs or so about the experience you’ve got that’s relevant to the job you’re applying for, then the rest of your resume list the companies you worked for and briefly outlines what skills you used/learned during your working life.