Torque is incapable of playing .mp3 files so you'd have to convert all your music to .wav files, which are generally larger in file size.
No, there is a mod that you can play any file extension continuous.
Isn't there Advanced Music?
Correction Torque can. I read it somewhere on the forums where a guy said that it let him somehow and Badspot responded "Really I didn't think that was possible" or something to the effect. I tried it and it worked however I did use small mp3's. Also if you didn't know: most weapon firing sounds are .mp3 or .wav. It may sound like gibberish but its true.