1. Yes, anything of value that your wife provides to a contractor in return for their services must be included in their taxable compensation. If you issue a 1099-NEC, this payment must be included. A 1099-NEC must be issued if total payments to the contractor were more than $600.
(There are certain fringe benefits that may be provided to employees tax-free if you follow certain rules. However, its not clear to me that payments to subcontractors would be eligible, even if you followed all the other rules, which your wife is not.)
2. Yes
3. Yes, it is regular compensation to the assistant. Instead of paying the contracted amount for services, she paid the contracted amount plus extra. That's perfectly legal as long as it's reported as taxable income. And the fact that it was more than the contracted amount doesn't change the fact that it is an ordinary and necessary business expense to your wife.
