How does the government collect revenue?
First stage would be to repeal the income tax and rely on indirect (excise) taxes. If everything proceeds in a positive manner, second stage would be to repeal those and rely on tariff revenue. Again, a return to the original intent of the Constitution - remember, there were no internal taxes in this country from 1802 to 1860.
As far as rating the evils of theft, tariffs are the least evil because they aren't imposed on any citizen directly or indirectly via threat of force. There is a consequence of slightly higher prices for imported goods, but that can be more easily avoided than consumption taxes by simply buying American made products.
There would still be funds left over from the flat tariff revenue after the government operation, courts, military (scaled down/neutral foreign policy/national militia), and federal law enforcement are funded. But, the prisons should be self-sustaining, and the FPI (UNICOR) shows that they could be. Right now, UNICOR is the only profitable aspect of government. Interesting that the reforms being called for is more privitization in regards to the removal of UNICOR's monopoly for providing to government:
We could also expect to see more funds such as this one brought into existence and paid for by inmates being contracted by the private sector:
And the chances for abuse (prison owners trying to convict innocent people for cheap labor) will be greatly minimized since drug use will be decriminalized, as well as all victimless crimes, and since judges will not have immunity and any politician convicted of any crime will face a mandatory life sentence with no parole. We can also extend these harsh criminal sentences to prison owners as well. And there'll be no direct taxes as well - meaning the less people have stolen from them, the less likely they are to steal from others.
Privatized police forces can be experimented with, but they won't be necessary at the federal level. Tariff revenue would provide the funding at that level. In the beginning we can have a division that polices the private police. Put in harsh criminal penalties - automatic life imprisonment for any private police officer who breaks the law - and that will lessen the incidence of corruption.
How does the government police activities that aren't peaceful, voluntary, and honest?
As it polices them now. Through statutes, court system and law enforcement.
Who defines the terms "peaceful," "voluntary," and "honest," and must an activity fit into all three categories to be considered lawful?
It would obviously have to be the Libertarians who are at some point elected to government, since no one else seems concerned with allowing other people these freedoms.
What does the government do when/if it catches someone doing something that violates the laws of peaceful, honest, voluntary activity?
It arrrests, tries them in court, and convicts them if they are found guilty by a jury of their peers.
How does this government fend off corruption? (And yes, before you say it, I know our present government does little to fend off corruption.)
This is obviously a CRITICAL issue, and the primary problem in our system. As I've written before, we would need a Constitutional amendment enforcing a mandatory life sentence against any politician who breaks his or her oath of office in any way, or commits any crime other than a minor traffic violation.
I would also like to see a National Referendum - but not to pass laws, ONLY to veto them. Also make the votes totals in Congress higher to pass laws and require a 9/10's majority to override a Presidential veto.
I have some other, more broadly societal questions too. Some would require a bit of hypothesizing.
Honestly, it would turn into an extremely long discussion. I really don't have time to discuss every single nuance.
How does the Libertarian system affect the physically disabled? This is perhaps the most important question to me. My mother is extremely physically disabled (she has Multiple Sclerosis), and the medications that keep her from going completely over the edge aren't cheap - we probably wouldn't be able to afford them without SSDI. Of paramount importance to me in embracing any ideology is knowing that my mother isn't going to wind up without access to the medications she needs as a result.
No government program affecting the disabled would be repealed without first having a successful private program(s) in place. Charities will grow more rapidly once the income tax is repealed, as a first step. But all corporate welfare, farm subsidies, etc. would be cut before any disability programs were even thought about. Ron Paul has stated this principle in several interviews.
Personally, I wouldn't have a problem continuing those programs indefinitely, as long as the government was reigned in on all other levels.
Does the Libertarian philosophy have anything to say about foreign policy or is it purely domestic?
The Libertarian philosophy has a lot to say about foreign policy. Just check out Ron Paul's new book.