[David Johansen]

The setting is simply that there is a town and there are dungeons.

1. Stripping out 100 points from the characters would probably be mostly attributes and advantages.

2. GURPS Dungeon Fantasy is compatible with GURPS Dungeon Fantasy.

3. Yrth can serve as a setting for Dungeon Fantasy but it was always intended to be a more rational fantasy world so it's not a great fit but there are abandoned dwarven halls in Zarak, and the sewers under Megalos (see Fighters of the Purple Rage for a particularly nasty sewer adventure featuring the six finalists of the arena's grand elimination), the Black Wood could easily work as a dungeon and under ground orc villages in the orc lands also seem usable, see Orc Slayer.

4. Say it's better than Dungeons & Dragons in every conceivable way of course! What other answer were you expecting around here? :D

5. A GURPS character sheet is a GURPS character sheet. Actually, I'm convinced that a blank sheet of paper is the best GURPS character sheet. I tend to type characters up in a word processor because people complain about my handwriting but with blank paper the space for everything is usually the right size.