Hi!
I'm new here too. Although, I'm pretty knowledgeable about this topic. I think I can answer your questions. I run
Photics.com, which is an Internet Publishing Business.
1. What format should my ebook be in? Any software to do this?
First, you might want to read an article that I wrote on the matter...
Basically, there are two ways to go... you can make it an ePub or you can make it an App. The latter is much harder, but I've had much more success.
I recently published The Unofficial GameSalad Textbook. I launched it to the iBookstore, I published on my website and I made it an app. I think the least successful of the three was iBooks. It's much harder to promote, but it is the easiest to set up. You can simply export a Pages (Apple Software) document to ePub. It's pretty easy. Also, there's no registration fee required...
https://itunesconnect.apple.com/WebObjects/iTunesConnect.woa/wa/apply
Although, you will need an ISBN and that's where I ran into problems. I needed a new ISBN every time I made major changes. That's a problem for me, as I often make changes to my apps.
You can download a sample of The Unofficial GameSalad Textbook - in ePub format - at my website...
At first I was impressed with iBooks, but it was very hard to market the app. The iBookstore is getting popular, but not as accessible as iTunes.
2. Is this ebook format compatible to android too?
I think there's a way to publish ePub documents on Android too. It's been a while since I looked into the matter. I think the new Google eBookstore might be a place to look. However, if I was to publish a book on the Android App Store today... as I've done in the past... it would be an App.
This part is a little complicated. I use a UIWebView and HTML to create the books. It's quite similar to an ePub document. Xcode (iOS) Eclipse (Android) are similar in this matter, so creating two apps from the same HTML files shouldn't be too difficult.
I think Apple is a little bit further along in this matter, as I can easily add video and audio files to my book. Android, I'm not so sure about video. It's been a while since I checked.
3. Is there any way for document rights managment (DRM)?
That's another reason why I'm moving toward my own custom apps. They're like any other app in iTunes. Not 100% protected, but better than distributing unprotected ePub files through my website. I'm not sure about iBooks, if the books from the iBookstore use DRM or not.
4. Do I need to build an app in order to load the ebooks?
No, there are alternatives... like the iBookstore.
5. What if I want to sell this ebook, how do I go about doing it?
To sum up... you can make your own app and register as a iPhone developer, or you can make your own ePub and register as an iBookstore publisher.
If that's complicated, you can try a third-party aggregator to publish your ePub file for you... like lulu.com.