Yes! If your jet pump is run dry for only a short time, serious damage may occur to the pump.
2" You will need a pump house. To meet code, it must have a hinged or removable roof and must be heated in freezing weather to keep pump from being damaged. It doesn't have to be pretty!
4" or 6" In the well.
2" Yes. Any buried suction line that connects the well to the pump must be enclosed within a pressurized conduit. That means you need concentric piping, or two pipes inside of each other. You will have a lot more noise every time the pump runs, though!
4" No, but it is not necessary, the pump is safe from freezing by being installed in the well. It is also much quieter at 3 AM when someone gets up to get a glass of water...
Do I have to prime my jet pump any time it has been drained or winterized?
I don't have a basement or crawl space. Where does the pump go?
Can I have my pump installed in my basement or crawl space to keep it from freezing?