my.yahoo uses cookies to grant access to the personal web sites. Unfortunately my.yahhoo does this in a really bad way. It does send the needed cookies only if the browser identifies itself as "Mozilla". If the browser has another name, it will never get any cookies from yahoo. To use iCab with my.yahoo you should accept cookies at least for the domain "yahoo.com" and set the browser name to "Mozilla" (open "Network/HTTP, Proxies" in the preferences dialog and select "Mozilla/2.0" or "Mozilla/3.0")
Is iCab able to use my prefered email or FTP client?
Yes. Open "Network/Internet protocols" in the preferences dialog and
deselect "MAILTO" or "FTP" if iCab should start the prefered mail or FTP client instead of handling this protocol itself.
What about contextual menus? Do they open automatically when I keep the mouse button pressed?
Yes, iCab is able to do this. You can configure (Preferences dialog: Browser operation) iCab so that contextual menus open automatically after a delay or that they open only when the Control key is pressed when the mouse click occurs (this is the standard behaviour that is suggested by Apple).
Are there any limitations of the 68K version?
The 68K version does not support java. Also there's no support for all the new features of MacOS 8.5 (e.g. proportional scroll bars, appearance themes). MacOS 8.5 doesn't run on 68K Macs.