1. What makes those expensive CAM programs so expensive? What advantages to they have over their cheaper counterparts?
Ease of use and advanced support for complicated tool geometries, etc. are what make the higher end systems more expensive, but the gap between hobby level and elite pro level is closing fast!
2. What is 2.5D? I understand the difference between 2D and 3D, but what constitutes 2.5D as far as CAM programs go? Why not simply be 3D?
2.5D is 2D on different level planes. The Z axis never moves at the same time as X and Y. 3D is simultaneous motion of X Y and Z. You should only consider programs that can do full 3D.
3. Are their any programs out there that can work natively with Solidworks part files?(not integrated into Solidworks because I can't modify the computers in the computer lab) Or is working with dxf files the "way to go"?
Yes. I suggest you look in to BobCAD v23. DXF is no good if you want to work in full 3D files.
4. When I import a DXF file ( or any file) into a CAM program what is the common procedure to produce the G-Code I need for Mach 3? I mean what is the Flow chart? Import -> create toolpaths -> output G-code?
Import, created tooling paths, generate G-Code, post-porcess for your machine. The post processor converts "generic" code in to code the will work with the specific controller on your CNC machine.
5. I have been looking at different CAM options, in particular CamBam and vectric's cut2D + cut3D + photoVcarve. Would these options suite me well assuming that most of the CAD work I would do would be in Solidworks (except the lithographs with photoVcarve)? Are they any others that I should consider assuming that I don't want to go over $1000?
Look in to BobCAD V23. You should be able to get set up for about $600. It will take a while to get them to come down to this price, but hang in there and you can get it. Make sure you get Mill Pro, BobART, and Predator Editor at a minimum, at that $600 price. It is too bad you don't have your own SolidWorks seat, as BobCAM is a plugin to SolidWorks and works great - very slick integration, and as you change the SW model, the CAM automatically adapts... If you ever get SW, BobCAM can be had for around $750. Unfortunately you can't apply a V23 purchase to a BobCAM purchase...
6. Are there any limits to what these CAM programs(especially the ones I am considering) can do as far as generating G-code? I mean could they make G-Code for any model that I could create in Solidworks assuming that my 3-axis machine could physically cut it out? (I mean not a "physical" impossibility more a "that object is too complicated to create the said G-code for.)
The main limitation is the types of tools supported. BobCAD only supports simple endmills, ball mills, and bullnose. No funky undercut mills, V shaped mills (other than for V-Carve tooling paths). The geometry itself is not a problem, it can be as convoluted and complex as your mind can create. The more complicated it is, the smaller the tool you will need to use if you make sharp turns.
7. What is the best way to learn these CAM programs? I really have no idea what I'm doing or how to create the G-code.
For BobCAD, there are tutorial CDs, and there are some videos on BobCAD and YouTube. You can also take the training class from BobCAD, which I took and felt was worth every penny. Best case would be to work with someone locally that already knows the software...