Yes they can be cut but not all at an acceptable standard. Hardwoods and those that contain more *oil* will make more of a mess usually.Can all, or most wood species be cut?
Very much so, the edge of the wood will be black or charred unless you use an inert gas assist system such as Nitrogen.Will there be burn marks?
Longer focal lengths increase the depth of field (an explanation HERE) but going from 50 to 63.5mm won't make a great deal of difference.Do I need to buy the 2.5" focus lens for this application?
To cut 1/4" wood a 40 watt machine is going to struggle to reach anywhere near a decent linear speed. 80 watts would be better and 120 watts would be my choice if I was looking at doing the same.
Given your requirements (or my assumption of them) a router would be a better tool for the job.