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Yes, you keep all your items, equipped or otherwise. You may not be able to access items equipped to characters who are unavailable to you, but you'll regain that access when you regain those characters (even if you have to go back to normal mode to do it).
Yes, though if you have to fight them before this happens, they won't regain the equipment / levels / skills you gave them until they're actually a part of your team again.
No. You don't lose access to pupils at all.
Bills which unlock store / portal features must be re-passed. Bills which relate to specific units remain passed until they transmigrate.
Yes, unless you dismissed them. Either way you won't be given new prinnies.
Assuming you meet the requirements, you'll be offered a choice between the two modes each time you start a new cycle.
The difficulty is somewhat higher, meaning that you can level faster - Etna mode's CoO3 is the best stage for gaining XP in the entire game.
You won't have access to most story characters, most notably Laharl. If you just whipped through normal mode while mostly training him, you may not be ready for Etna mode.
It has two different endings.
also just got all achievments today, you keep everything but some things you only get back when you chose main game mode after you beat etna mode on that file
This was my issue when I got to Etna mode. I didn't think ahead and most of my party were charcters that are Laharl mode only. I had to pretty much train a new team without most of the good low level grinding spots (CoO3 is all good and dandy, but only if you can come anywhere near to beating it).
Happy reincarnating dood...
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Update on Pleinair (after completing Etna mode and starting new game plus in Laharl mode): so happy she didn't "eat" all the equipment, for some reason she is not available in Etna mode, only once you are back at Laharl mode does she automatically join again with all previous items. Will test on other special characters...
@Gatsumon: Yes, all created characters will persist as @Bomb Bloke already mentioned, "pupils" are permanent until you dismiss them regardless of if the mentor is present or not. All story unlockable characters will not be until you hit the chapter that lets them join.
I know I'm necroing this thread, but thought it best to keep my related question in this thread: Is the mentor / pupil relationship lost and restored if you from Laharl mode -> Etna mode -> Laharl mode? IE, In Gatsumon's example, will Rose, a pupil of Laharl lose pupil status in Etna mode, but gain it again when returning to Laharl mode, or is that relationship permanently broken from then on?
To answer my own question: I'm now in Etna mode, and while Laharl is not present, his pupils are, and in their Status, under Mentor, it says 'Laharl'.