Writers at Time and other liberals complained about Luce the way they complain about Murdoch today, to the point where many thought there was some major cultural divide between the brutish, philistine Luce and the sensitive, creative writers. But it was all about politics. Once the writers were cut loose from Luce's rule, there wasn't any great rise in the magazine's quality -- if anything, quality declined over time.
Yes. You are well-informed, and correct.
U.S. News was certainly less tabloidy than Time or Newsweek, and its readership was more business oriented. Its circulation, as I recall was somewhat lower than Times', but not really dramatically lower. They simply appealed to a different demographic.