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Pashuteh Yid-
Excellent questions, by which I surmise you know at least some of the answers.
1) Is there a reliable color code for hot vs. neutral, or can it only be ascertained with a meter?
The reliability of correct color-coding is only as good as the reliability of the person who did the work.
Standard two-conductor cable should use black for hot, white for neutral.
Standard three-conductor cable should use the black and red as the hot circuits, white as neutral. The two hots should not be on the same leg of the breaker panel.
If you need to use the white wire as a hot (for instance switching a dedicated 110 circuit to a 220, or simply running a 220 line) the usual practice is to wrap a band of black electric tape around the insulated end-portion of the white wire to show that it is being used as a hot.
2) What is major difference between neutral and ground?
They both end up connecting to the same place (the ground).
3) Can the electrical box be considered to be grounded? I.e., if no third wire, and there is a need to connect something to a reliable ground, will a connection to the box suffice? For example, when installing a 3-prong outlet where previously only an older 2-prong outlet existed, can one just assume the ground terminal will be grounded by virtue of a connection to the box?
NEVER assume anything.
If the box is properly grounded and the outlet is correctly fastened to the box there should be no need to attach a grounding wire to the green ground screw of the outlet.
4) a) If a line is rated at 15 amps, what is highest one can safely use continuously, i.e., for an air conditioner? I have heard up to 80% or 12 amps.
80% for continuous load is correct. Breakers and fuses are sometimes designed to allow a brief surge above the maximum designed amperage, for the startup of appliances.
b) Does the number on the circuit breaker always correspond with the actual gauge of the wire used?
It always corresponds with the minimum gauge of wire that should be used.
5) In older houses, does the wiring ever fray and present a fire hazard over the years, or can one assume the insulation remains effective even after many years?
Since the only other option is rewiring the house, we often by necessity operate under the hope and assumption that existing wiring is OK.
Here are two of the most common issues with older wiring (assuming it was done properly to begin with):
a) Old wiring with cloth insulation. The insulation can become very brittle and crumbly over time. This most often presents a problem when you open a switch or fixture box to change something, and the manipulation of the wires causes the insulation to crack off or disintegrate. It’s a royal pain to work with this older wiring.
b) Aluminum wiring. This was used for a relatively short period of time (about forty years ago). The problem with aluminum is that it expands and contracts differently than materials it was connected to, which can lead to loose connections, which may cause arcing (heat = fire hazard) and shorting.
As far as I know, copper wire itself remains stable over the years.
Fraying would result from physical wear, such as an extension cord that is stepped on and pulled.
A couple of side points:
Splices should always be twisted in a clockwise direction, so the fastening of a wirenut over the splice is in tightened in the same direction.