Mozzy - Your calculations probably are wrong, and 400m reps should be faster than 1600m ones. But I also found them tricky to work out. However, I'm sure there was a link to another page with more detail about the various types of run (I think it said 8 rules of the system, or something). On it, under speedwork, it basically said that the speed sessions were good, but the main thing is to be doing some speedwork, and not let it get dry and boring. So doing different sessions that week with your club, or another speed session you fancy, is also fine, so long as you are pushing yourself in some kind of speed interval session.
The lower mileage is because you are training more intensely in each run than in other schedules and need to have recovery time to get the benefit. I'm sure it helped me avoid overtraining injuries.
I never really knew how long the recoveries should be. I reckoned either 2 or 3 mins, but obviously less if the rep was shorter (i.e. I wouldn't rest for 3 mins on a 400m rep taking less than 1:45). There may be a proper answer somewhere, but I couldn't find it.
As to the 5K or 10K race pace, I suppose for most of us, there won't be a dramatic difference and it just gives you a guide based on a race pace where you are going for it hard, rather than holding back over a longer distance. Again, it will be a guide and the biggest benefit is from doing the three types of run over increasing intensity over the course of the training schedule.
And, as always, there is no such thing as a dumb question when we're trying to find out stuff to help with our running. It's just information someone else discovered first.
Happy training. I can thoroughly recommend the FIRST 3 day a week schedule.