Hi Shaji,
Please find your answers respectively below:
1. Applets would be compatible. No worries, you can even get applets from 11.5 version and those would be compatible with 14.0.
2. As now there is no question of compatibility and you want to make a wise choice between Applet and UI5, consider the case. When you have client using IE8 and below, you should be using applets with the limitation that applets would be supported by some specific versions of JRE. If you are sure that your client won't use anything below IE8, go ahead with UI5 developments. Again, the decision should be a nice trade off between redevelopment effort and migration.
There's nothing much on html side when you move applet based dev from 12.2 to 14.0, just that you might need to update project path as and where required.
3. Nothing much can be said on development time, but ya there are some improvements and optimizations on how the suit performs.
4. UI5 components as Anushree mentioned gives an excellent user experience. There are hell lot of controls that you can use to make you page highly interactive. Also, UI5 have an added advantage on mobile and tablets app developments due to better layout controls.
Hope this helps.
Warm Regards,
Swaroop