For incentive stock options (ISOs) #1 is not true and the earnings are not taxed as income. However, the earnings generated by your shares ((EV - TP) * #S) will be applied as an adjustment for the purposes of computing your alternative minimum tax (AMT).
Startup employees have ISOs, and are able to exercise them as ISOs until 90 days after they leave.
This is not necessarily true. I am a startup employee and I have NSOs.
In this case it seemed to be the case where one of the founders didn't know the difference when setting things up initially. After series A one of the investors pointed it out and new employees were given ISOs and old employees savvy enough to care were paid off.
edit: just to make sure I'm not crazy I dug out my option agreement and it's definitely NSO.
Condolences. That really sucks. :(