1. If I set a file to chmod 777 in general webspace area, can anyone access and alter that file?
Yes. My thinking is that someone could execute a php script on there own server that alters the chmod 777 files! - is this incorrect thinking?
It depends on which user php is running as, and what permissions it has on the directory/file in question. 2. having the main .htaccess file as something other then chmod 644 - (namley 666) would that put it at risk of alteration, downloading or circumventing?
Not immediately, no.