Yes location and Upload Speed does come into play when a modern torrent client tries to pick which seeders to connect to. Users with very high upload speeds will obviously get more connections. This is why it's super hard for users to get Upload on private trackers like RED where a lot of users use 10-20 Gbps seedboxes. Your average 500 mbps connections has no chance against it, you'd get around 1-5% upload of the size of that torrent if you're lucky. There's also a thing where Seedboxes would pick seedboxes that are in the same data centers, racks as them and would cross-seed/leech between themselves first.

The downloader will make a connection to as many of them as possible. I believe it doesn't care about the capabilities of the seeder at all as long as it has the piece it's looking for.

I don't believe so. I'm fairly certain it'll connect to as many as your settings will allow. I connect to 40+ seeders fairly routinely.

Though there are other settings that will effect who connects to you or not. Encryption is one. Some leechers require the seeder sends an encrypted stream. Another is the port forwarding. If you don't have your port forwarding settings set up properly on your client and router then not as many will connect.

On the other hand if your home network upload is maxed out due to low cable/dsl upload speeds, that'l stop new connections too.