I've got an M500. Here are my answers:
"(1) does the Soundbridge recognize the playlists and smartlists that I have created in MC?"
Yes!
"(2) how does the Soundbridge handle internet radio streams thru MC?"
They are all visible and can be played, but there's a big problem with the integrity of the data stream. I hear all kinds of skips and odd noises on the radio streams that play just fine in MC. These streams play OK on my Philips Streamium, but only for about 40 seconds. There are some major bugs in the way MC handles internet radio streams over UPnP.
The good news is that the SB will play radio streams all by itself without a server. Not what you're asking about, but it works.
"(3) would you recommend this combination over, say, the Sonos music system? "
Don't have any experience with the Sonos, but the Roku route sure is a lot cheaper. Plus you're not locked into a single company's proprietary communications protocol.
If you have a pocket PC there's free software called VisualMR that will allow you control the SB from your PPC via WiFi. I've tried it and it works quite well. There's also a PC version of the same app.
http://www.tl-it.de/media/pages/visualmr.php?lang=e