The nature of "space"

Possibly - depends what you mean by "the known universe" No such place - your whole starting assumption is wrong, and your creationist friend is correct: matter is not expanding into space; space is simply expanding between matter, as predicted by General Relativity. No, space is as real as the atoms that make up your hand. Neither are atoms, electrons, photons, etc. Tangibility is a purely macroscopic phenomenon involving near-infinite electromagnetic interactions between near-infinite numbers of photons and electrons associated with the atoms of the toucher and the touchee. Same with visibility... The "balloon" analogy was constructed to precisely dispell the erroneous "cloud" analogy

True - that is like claiming that temperature is "created" in a kettle, or speed is "created" when a ball rolls down a hill. Or better still, that longitude is "created" as you journey south from the North Pole. The distance between any two objects is just a number, and cosmological expansion is simply that number getting larger for all possible pairs of cosmologically sized objects. "Empty" space is seething with subatomic particles. But that's beside the point. Take three points in space: A, B, and C. Something we normally call "real" might be the number of photons at each point - say P(A), P(B), P(C). These numbers form a "field" when taken over all points. What we call space is formed by the distance between the points D(A,B), D(B,C) and D(C,A). These numbers also form a "field" when taken over all points. There is nothing more "real" about the photon field than the distance field, they both manifest in our experience, just in different ways. You would mesaure the distance between pairs of points and these would reveal the mass distribution in the jar, possibly a zero distribution of mass. But the existence of the distances would be the "space". The Universe is woven together out of the different fields. That is the sum total of existence as far as we can tell - just interwoven fields.

This isn't actually that relevant. If we were in a closed Friedmann Roberston Walker universe, we could still have the same "superluminal" expansion (for sufficiently large universes), but what would prevent the circumnavigation is the big crunch would occur before the trip could be completed.Our situation is muddied by the action of the "dark energy" field(s) - in the current phase, the expansion is accelerating, so there is no hope of a circumnavigation. But we don't know the dynamic evolution of the dark energy, and it is possible it could alter such that a circumnavigation is possible.Of course, all of this presupposes a closed finite Universe. We do not yet know if this is the case. The Universe could well be open and infinite (It could also be open and compactified, but that is a different story...)