My H1B visa extension is due in AUGUST 2011 and i am planning to apply in next few weeks. I am expecting H1B renewal for next 3 years, until AUGUST 2014. Whereas my Indian passport expires in FEB 2012. Below are my questions:

1) Will USCIS hesitate to extend my H1B beyond FEB 2012 because of my passport expiry then. Meaning, should i first get my passport renewed and then apply for H1B extension.
2) If my current H1B expires in 08/20/2011, then what is the due date for filing H1B extension. FYI: I heard that it is - atleast 10 days before the actual date of expiry.

Should i file my H1B extension in premium processing? Any other recommendations for my situation? Thanks in advance.