Hitting the volume icon to mute/unmute is a bit more standard. Perhaps making "mute" the first choice in the menu would be a good compromise. It reduces the mouse way and I'd guess not many people using left click and volume up/down on a regular basis.
Agreed. Click to mute, right-click for options. You don't need quick-access to those, and that matches standard behavior in other apps.
I would also remove the volume up/down options or change their functionality.
No-one is going to use a menu option which adjusts in 0.5 dB steps.
Maybe 5-10% steps would be useful, but I'd just remove it entirely.