1) Check out:
http://codex.wordpress.org/Function_Reference/media_sideload_image
2) I found that WP function to be somewhat limited to I wrote my own wrapper class/method. If you want to do the same you’re going to need PHP’s copy() function
http://us2.php.net/manual/en/function.copy.php
as well as WP’s wp_insert_attachment()
http://codex.wordpress.org/Function_Reference/wp_insert_attachment
Unfortunately, I haven’t pushed my code to GitHub just yet, so for now you’ll have to put something together yourself.