No, they didn't close it. They TRIED to close it. They got all of the airlines to sign off on the deal before DFW got underway. Unfortunatley for AA, Continental and Braniff, Southwest began flying after the agreement, but before DFW was completed. No one thought to try to make them sign off on a move. (Delta also served the Dallas market, but at that point it was not a major player there).
When Dallas tried to close Love, Southwest sued and won. The airport remained, and remains, open. I believe that it is presently served by two airlines. At one point within the last 10 years, they were up to 5 airlines.
That's correct. Love was supposed to close but Southwest got in. Weren't they in on the basis that they would fly only intrastate, though? Then they fought for and gradually accumulated permission to fly out of state. It's been a very legalistic thing, but inevitable given all the parties involved. The free market's a marvel.... regulated economies are a nightmare.