1) The greatest challenge for Tracking Protection seems to me to be not technical, but strategic: How do you protect users from tracking without creating a backlash from the tracking industry and their customers (the whole Internet economy built on tracking) that will make the outcome worse or no better, and after an expensive battle. As an extreme example, if the next release of Firefox cut off tracking for all its users then I think there would be a war, including possibly lawsuits and an arms race between trackers and tracking protection. The users would be no better off (or worse off) and it would consume Mozilla's resources.
Maybe the first step is to raise awareness of tracking and the idea that users benefit from and should have the option for privacy, which can be done by simply telling users about Tracking Protection when they open Firefox after the update, whether or not they actually use it.
I don't see this as a concern for Mozilla. Google/Apple/Microsoft and their respective browsers sure, but the point of Firefox is to provide a browser whose goals align with the user. The industry's goals here have never aligned with users and it's about time (many, many years too late) that a major browser vendor ships this as part of the browser rather than an addon.
They make a lot of money from people who rely on advertising like Yahoo and Yandex.
Pure speculation though.
For example, if you're trying to sell tickets to your ski resort, it wouldn't necessarily hurt your bargaining position to burn down gyms, bicycle shops, and other places that command your prospective customers' time and money.