Real Explanation

There was an interview with the head writer of this series floating around, but all the links to it are broken now. So you have to find a cached version of it, and it is quite long, but I'll sum up the important stuff for people coming here looking for answers:

Q: What are the experiment and the Program?
A: Fifty years ago, a colleague of B.F. Skinner started a program to turn evil people good. The program used an algorithm to find people with the capacity to do great evil, who were right at a point in life when they could possibly be changed for the better. The algorithm could also find people with the capacity to do great good. Most of the participants were bad, but they would throw in a good one as a wild card.
At first, they were honestly trying to make the world a better place. And, they would return the people to their normal lives if they failed the experiment. However, when those people did end up doing great evil, the program decided it would be better to terminate them than return them to the world. Also, the program was running out of funding or some such issue, and with different people in charge by then, they took on new objectives such as creating assassins. Basically, the program itself lost its soul.

Q: What was level two?
A: A training ground of some sort.

Q: Why did Blackham know Charlie's wife's name?
A: Most of the participants had secretly been briefed on others all along.

Q: How would it all end?
A: Janet would destroy the whole organization.

Q: Why did the ads say that all the questions would be answered in the season finale, but they weren't?
A: NBC told the creators they had to end it on a big cliffhanger. Then, NBC put that line about revealing everything into the ads because people were mad about the Lost finale. NBC made those calls and the show's creator didn't like it.