It's the same thing, only with lower quality visuals. ps2 games look a lot better on a 480 CRT 4:3.
I would have to say it looked terrible on an 8 year old toshiba via S-video. Maybe that's just in comparison to the panny plasma I had it hooked up to 5 minutes before, but it was absolutely terrible. Still better than what the PS2 looks like on either TV, though.
Probably not, as you stated, both your S-Video and VGA connections are outputs. Now if you had inputs on your laptop, I would say that it would be possible. There might be some USB, Firewire, or even PCMCIA card that will allow those inputs on your laptop.