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<E28> Replacing Factory Stereo

I'm considering replacing the factory stereo on my '87 535is. It
cuirrently has what I beleive is a Blaupunkt cassette receiver and
a trunk mounted amp. A few of the questions I have are:

1- To keep things on an economy budget, is it feasible to just start by 
   replacing the head unit and use the factory wiring and factory amp.
   I have the wiring diagram for the sound system and feel comfortable
   being able to splice/solder connectors to adapt the factory wiring to 
   an aftermarket head unit.

2- I assume the factory wiring from the head-unit to the amp is considered
   pre-amp out and not speaker level. In that case, if I decide to go with
   a head unit w/ separate amp configuration, can I fit RCA plugs to the
   exisiting wiring to make my head-to-amp connections.
 
3- For now, if I'm going to use the stock speakers, can I rely upon
   whatever cross-over wiring is in place and just pickup the speaker
   wires in the trunk at the stock amp location. Or should rewire the
   speakers front and rear.

4- If I decide to go with just a high-power head unit with no seperate 
   power amp...I was thinking of running the four pairs of speaker leads 
   to the trunk and connecting to the factory speaker leads there...in 
   order to utilize the factory cross-over wiring. Comments pro/con?

5- Is the factory fader control wired between the head unit and power amp
   or is it wired between the amp and speakers. It's odd that the factory
   system provides a front-rear fader but no right-left balance control.
   I assume that I want to eliminate the fader since most all after-market
   head units include both balance and fader controls.
 
TIA for any advice/input.

Regards,

Jonathan
'87 535is 
'72 2002tii (undergoing restoration and 5 spd conversion)