(1) I've never seen a 10M demand. I haven't explicitly tracked this, but I don't recall seeing much more than a 5M demand.
(2) AFAIK, their demand is a constant, and doesn't change from team to team, ie it doesn't depend on the skill of the scout. Thus, the demands must be based on some combination of projections and current ratings.
(3) As MikeT echoed, a high demand correlates fairly well with a good prospect, but not perfectly. I would estimate that, in a given season, there will be between 3 and 6 guys who demand 4M+. 1 or 2 will be inflated-OVR guys who probably are only worth a 3-6M signing bonus. 1 or 2 will be decent-but-not-great and probably worth between 8-14M. And then there will probably be 1 or 2 studs in there who are worth 16M+
I've thought about dropping IFA down and going based off demands and whether other owners are bidding, but it just doesn't seem worth it. I can't really imagine a scenario where you plan to invest heavily into IFA but only go in the 6M range of IFA.