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They do appear in Skull Caverns, and in potentially very large numbers, however the odds of them appearing are linked to how deep you are. Typically you want to drop in with bombs, get very deep very quickly, and then start mining the many Iridium nodes you will find there.
You can, but it's not normal due to the very low drop rates on it in the Mines.
And very rarely in the quarry I think.
You can find the ore in geodes, or have it drop from mobs - even in the lower levels of the regular mine. Crates and barrels, too, I believe.
Prismatic shard dropped for me 3x: once from a mob in the regular mine IIRC, once from a geode and once from a mob/rock or crate in the skull cavern. Not sure which, I was bombing and hacking away at the time *g*