It is hard to tell from handheld shots since there are so many variables that contribute to camera shake. This just goes to prove the old saying that 'Cameras don't take blurry pictures; people take blurry pictures!"
1) The 1/40th of a second isn't any magic number, it is just the flash sync speed of the camera when the flash is used. In this case, it is the flash that freezes the action and suppresses camera shake and the flash duration is much...MUCH shorter than 1/40th of a second.
2) As you reduce ISO, the image just gets darker (with the same shutter speed) but the degree of blur would remain about the same.
3) Yes, 1/1000th of a second is ten times faster than 1/100th of a second and more able to freeze motion (including camera shake that causes blur)
Also, the more you zoom, the more camera movement is exaggerated.Tiny hand movement is magnified when you use the zoom. In the film world, the rule of thumb was that, in order to hand hold a telephoto shot, you needed to have a shutter speed which is the reciprocal of your focal length. So if you have a 250mm lens, you need to have a shutter speed of 1/250th (or FASTER) to minimize camera shake. The heavier the camera the more difficult that was. In any case, if you can't get that sort of shutter speed then the only solution is to brace the camera agsinst something or to use a tripod.
One of my suggestions for digital camera users is NEVER to use the LCD to take pictures because you have to assume the most unstable and shaky position (arms outstretched, head tilted, back arched, feet spread) that it is no wonder that pictures are blurry. Use the LCD for review (AFTER the shooting day is over) but not for taking. Unfortunately, camera manufacturers are making it difficult to avoid using the LCD by either not including an optical viewfinder at all OR making the optical viewfinder so primitive as to be useless.