Hi Pat:  I built a calliope as you describe a few years ago.
The PVC pipes were easily made and sound surprisingly good.
See and hear it at http://rpartos.org/calliope.html 

To answer your questions:

1) There are many thousands of MIDI files available on-line that can be
played.  The music is easily transposed with software to be within the
range of your instrument.

2) There are a number of circuit boards available to decode MIDI.  The
one I used can be seen here:  http://www.j-omega.co.uk/MTP/mtp.shtml 
Others can be seen here:  http://www.videopete.com/midi/ 

3) Yes, you can either use a MIDI keyboard or an old organ keyboard
connected to the direct action valves.

4) "Does my approach make sense?"  No problem, many have done it!

I'll be glad to answer any further questions.

Dick Partos
http://rpartos.org/