It is equivalent to 1.3 times the parents font-size. It is a scaling factor that is passed on down to the children unlike percentages where a computed sized is passed to the children and the scaling factor effectively ends.
(2) and is line-height:1.3em always 1.3?
em and percent are the same thing when applied to font-size. 1.3em is exactly the same as 130%
(3) and line-height:50px; - to center txt vertically
line-height is added in the form of half-leading to the top and bottom of a font which means the font is more or less centred in the line-height that you set. If you have a block box 50px high and you want some non wrapping text centred vertically in that box you can set the line-height to the same height of the box causing the text to be centred. If the text wraps to another line then it won;t be centred within that element and indeed won’t fit.
should that be 50%, same way you do 50% for image to center it vertically?
No that would cause the line-height to be half the size of the parent font and therefore not big enough to contain the font at all and you would probably get strange results cross browser.
Just don’t use keywords and you will have no issues. Keywords vary in size between browsers anyway so there is no consistency.
Just apply the font sizes you require using em/percent (or px if you don’t care about ie6) and you are good to do. No need to use the larger or smaller keywords as that will be inconsistent also. You are the designer so set it at what you want it to be.