Is it necessary to use a separate payment address per mining rig? Or can I set all my rigs using the same payment address?

It will likely vary between those. On average I find it more profitable than LTC on wemineltc by 10-20%, having it as BTC is nice too.

It definitely was for me and the graph at the top seems to confirm that.

About the only reason to use different payment addresses is so you can compare results of different rigs (eg. If they have the same hardware but different settings)

I just checked and middlecoin seems to not be responding (cgminer will start mining and then a second later say the pool is unresponsive and does this several times in few seconds...) are we rapidly switching coins right now or is there something else?

I have mined for several hours using CPU:

-o stratum+tcp://middlecoin.com:3333 -u 13DYQTZfHbX63WGuU6ArZuKBxbd3Vpoz1A -p x

As far as I see it's mining OK (although I haven't made any "yay") but my username/address does not show on the MiddleCoin user list. Is this normal? I am doing something wrong?

Thank you in advance

I dont know if it's suppose to be like this and I shouldnt worry, but is my hashrate suppose to alternate like this: http://middlecoin.com/reports/14vbJdrBPUwUuH6HZEqxe44uoCFrSRU14V.html
On CGMiner the hashrate is pretty consise around 700-750 Kh/s.

I've got 5 rigs pointed at middlecoin totaling about 10-11 MH/s. I've used one payment address, but I like seeing the variances between rigs. Is there any downside or performance hit if i use a distinct payout address for each rig?  It would let me easily see if one is having an issue. 

Sadly it would eliminate me from ever making it to the top of the table as far as hash rate...but that aspiration might be worth giving up for more granularity.

Also I have done a multi day test just days ago with identical rigs point at wemineltc, hashcows and middlecoin... guess who won? 

The report is based on the number of difficulty 512 shares you found and submitted.  Just like any other coin, mining sometimes comes down to luck, and during a period you may find twice as many as another period of the same length and sometimes you may find half as many.  So long as it's in the ballpark and your miner is submitting shares you shouldn't need to worry.