I would answer yes. But all guys are different and age/experience is a factor. I would say it's more a turn-on for guys who have less experience. And it would also be more so for guys who are all about boobs to start with - as opposed to buns, nice legs or whatever. Next to dancing, hugging is also one of the few excuses (outside of Italy) to get that personal.
Yes a guy can feel a woman's boobs by hugging her. As far as getting turned on, I doubt most guys would actually get turned on. They would like it, but that's about it. I've never gotten a boner from hugging a girl.
Yes to all your questions. I hate it when my hot female cousins hug me because after that split second hug I got to either sit down and lean forward or hide behind something so that I let everything below the belt settle down. Literally!
It's hard to explain. Regular hugs won't do all that much unless you have a big set of boobs. Normally what I consider a boob hug is when a girl cradles my head and rests it on her boobs. I can't say for all guys how they react to it but my own personal experience is that it doesn't turn me on in the perverted way but I really love them. It makes me want to fall asleep in her arms and it becomes a huge intimate moment. It's one of those hugs you never want to end.