Only for FL residents and AP holders? Any way to join with regular theme park tickets or WDW hotel stay?
Nope, only FL residents, AP holders, and DVC members. Good reason to get yourself an AP!
If we decide to upgrade passes to AP, do we have to do that on first day/park? Or anytime during stay? And can that upgrade to AP be done at same time as TIW purchase at a guest relations window at any park?
You can upgrade anytime, but for the discounts I would upgrade as soon as possible. You can buy TIW at the same time. Between an AP and TIW, you will save 20% off on almost all TS meals between now and September.