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She contacts the consulate; schedule an appointment; gets visa and comes.
that depends on the strength of your H1B
Yes she would be able to.
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Ideally contact your employer to help out with the process. If it is not covered, your wife will independently apply for H-4 at the Consulate. For documents, check out the Consulate's website. The visa is not "changed." She will be granted H-4 in addition to her B1/2 or they may cancel it. It is up to the Consulate's discretion. Yes, she can travel and re-enter on H-4.
This response is general in nature and cannot be construed as legal advice, given that not enough facts are known. Any comments offered on Avvo are of a general nature only, and are not meant to create an attorney-client relationship. If you would like additional information based on this response, please contact my office at 510 657 7665 or 415 902 0832 to schedule a consultation.