1. For most services you can configure based on group membership. I.e. if a user is member of the "ftp" group she can access your server's FTP daemon. However, you should simply not use telnet under any circumstances. If you have the telnet daemon installed, disable it. Use ssh access instead.
2. You can use a chroot jail to make sure the user cannot escape (easily) from her home directory. I don't know about Redhat but Debian has, as always, excellent documentation
on how to set this up.
3. I'm no Redhat man. If you purchased a license I suppose Redhat will be willing to tell you how to register your installation.