#2 sounds fairly normal. Some moderate outside edge wear is going to
occur. I see this on our 95 855 and 98 S70. The two cars have
had 6 sets of tires between them and they all had some outside tread
wear/saw tooth pattern on the front tires. On the 855 we get about
33K miles from a set. The S70 is a T5M which can eat tires. On that
car the higher performance (softer compound) tires went about 22K
miles before needing replacement (it now has Michelin XGT H4s which
should last a bit longer).

No problem at all with how you rotated your tires...that's how I did it with my
'94 850 Turbo wagon before I sold it. Just keep rotating in the same way each time you rotate and you'll be fine. As far as the shoulders of the tires wearing more than the rest (if I understood you right) is a common problem with tires that don't have a stiff sidewall. I have the same tires you have on my new V70 and frankly this is a concern for me too although the tires are OEM and new. Just keep tire pressure up and hope for the best. Next tires you buy, you should consider something like the Bridgestone Turanza LS-H or LS-V which has a stiffer sidewall and can handle not only the front wheel drive but the weight of our Volvos.... I should add that if only the inner (or outer part) part of the tire are wearing and not both outer edges, it could be a problem with your control arms or tie rod ends...have them checked for play. This happend to me once (with the control arm)but unlike you it was the inner portion of the shoulders wearing on just the driver's side and after replacing the control arm, I had no problem. It isn't a difficult replacement and if you look around on the internet you will be able to find that part without much trouble and without too much $$...just that you'll have to have an alignment done again. Good luck and keep us updated.