Garran: While you can exploit the system, it isn't a particularly good mindset to be in while trying to become the embodiment of virtue!

As for the karma effects of overpaying: I vaguely recall that this did make a small difference in terms of karma, although I'm not sure which virtues were affected.

Elmofongo: Another question how many times I can cast spells, I know that there is a MP meter but I assume that if say I mix the ingrediants to cast fireball 5 times at once I can cast fireball 5 times in Battle and I tested it while I had full MP but still only cast once or twice?

HiPhish: Always take a look at my Ultima Resource Collection thread first. Here is an overview about leveling up throughout the series:
http://ultima.wikia.com/wiki/Character_Advancement

Basically in Ultima IV it comes down to experience points. Get enough experience and you can reach the next level when talking to Lord British. You get exp. for killing enemies (only the character who delivers the death blow gets the exp) and from completing quests (finding items for the main quest), but only your main character gets those. To level up your companions get into combat and have *them* deliver the last blow.

The virtues work in the background. Each virtue can range from 0 to 99 and each action you take adds or substracts from you current amount. For exampe if you flee from combat you lose 2 points in valor. Keep in mind that it doesn't matter how much you give or take but how often you do it. It's better to give a beggar 10 times one gold than once ten gold. Similarly, if you want to cheat the herbalist woman get as many ingredients as you can in one go and if you want to improve your status buy onlyone ingredient at a time. Here is an overview of the virtues in Ultima IV.
http://wiki.ultimacodex.com/wiki/Virtues_in_Ultima_IV

Spoony says that attacking fleeing opponents is dishonorable but I haven't found anything like that in the list nor does anyone in the game advice against pursuing opponents, so I'm not entirely sure.

EDIT:
OK, I just checked, I hat an Honour of 99 (ready to ascend) and killed a fleeing orc. Then I loaded my save file into the savegame editor and I still have 99 honour. So killing fleeing opponents seems to be OK.

Garran: If you have Fireball spells 'mixed' then you should be able to cast it until that supply runs out OR the character attempting to cast the spell doesn't have enough magic points (or isn't high enough level) to do so. Magic points are used up along with the reagent mix each time you cast it, so a low-MP character could end up out of power with only one or two casts.

Elmofongo: ...

Elmofongo: And finally what are the Benefits when you become a full Avatar after medating all the shrines with all your virtues at 100%?

Elmofongo: OK I need help, in Ultima 4 I almost beat the dungeon Deceit, until on the 7th floor there is a pit trap, and now I cannot get past it so I am stuck in the 7th floor and the blue stone was just right there, how do I get over that pit?

And Grappling Hooks first appeared in Ultima 5 so I don't know how in Ultima 4.

Elmofongo: When or Where do I get a Horse or the Balloon?

HiPhish: 1) At Trincic or Paws (I'm not entirely sure) you can buy horses, but I can't tell if there is a point. Maybe you consume less food or the cance of getting "slow progress" is lower when riding, but whatever it is, it's not obvious.