1- Fuel Efficiency - i've seen in multiple posts that the listed fuel ratings of the Escapes don't come true. Particularly that Escapes with a V6 engine get poor mileage. How true is this from the experiences of those on the board here? Would i still notice a spectacular increase in MPG compared to my current V8 Mountaineer?
You will get better mileage with the 3.0L compared to the Mountaineer you have now, but the newer Escape has the all new 2.3L 4 cyl model that is quite peppy especially with a 5 speed manual trans. The Automatic version is slightly sluggish, but the power is there when you need to stomp it down.
2- 4X4, my vehicle must have an AWD/4X4 option, as it'll be used on Hills and inclement (snowy new england) weather. How does the Limited 4wd work in such types of weather and environments such as the occasional unpaved road?
Some older models had the 4WD that could be manually turned on, but I think they are now all AWD and totally automatic. The AWD system works quite well. It runs in FWD until it detects wheel slip and the fronts engage. Not too many problems with this system at all.
3- Reliability - How do the scapes rate in overall reliability
Some of the older Escape models had a few common issues with swaybar links wearing and lower control arm bushings, but the are pretty reliable. These AWD Escape models will go through tires though! Only expect about 30,000 miles out of a set. The newer models do not seem to have this issue though.
a 2007 XLT 4WD 3.0L Duratec v6 4-spd Automatic o/d Trans is what i'm looking at... going rate after incentivies is 20,000. Is this a recommended bargain or should it remain a pass-me-by?
Truthfully, I suggest a FWD 2.3L with a 5 speed manual. A FWD will get you out of even harsh winter condition in my experience and the Escape with only FWD is well-balanced and stable. These "Base Model" versions are truly remarkable. Our dealership only sees them for regular maint and not to many problems. The AWD models with the 3.0L are also good, but have more issues with brakes wearing faster and suspension components.