Dang a hard one. If you look back a ways on this thread I think you'll find pointers to propellor theory in case I get lost with this explanation.
Yep, here's one: http://www.gregorie.org/freeflight/shee ... index.html
Spend some time understanding that if you haven't already.
Answering some of your specific questions. I'm not sure where you got 17.6 degrees for the tip, this is only correct for one pitch/diameter ratio, not in general. Yes, near the hub the blade ideal angle approaches being parallel to the rotor axis (straight up and down). No the tips never quite reach 90 degrees from the middle. They get closer as the blade gets longer, but never reach it.
I'm going to stop with that for now because the existing explanations are better than what I can write. If that didn't cover what is confusing you, holler and I'll look up a reference to copy with some diagrams.