[pkscout]

1. Multiple Artists: What would be the best way to show images for multiple artists under one song?
Is it using the common artist field such as "Artist X feat. Artist Y" or should I put the "feat." in the song title e.g. "Title (feat. Artist Y)"?

If a song is truly by two artists, I would put it in the artist field as Artist 1 / Artist 2. Kodi will split this and tell AS there are multiple artists. For featured artists, I tend to put them in the song title.

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2. Because I don't want any extrafanart images within my local music folder, would it be correct to set the priority to "remote first" to just have the downloaded images for the specific artists in the cache folder? In addition, would Artist Slideshow put those cached images in my local folders when there is an extrafanart folder?

As long as you don't have plans to try and add local artwork, then doing "remote first" is fine. You could do "local first" and set a different directory for the images besides your music folder. That's what I do. I have E:\Kodi\Images\Artists for my artwork. My music is in E:\iTunes Media\Music (or something like that).

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3. The next time I play a song for which Artist Slideshow has already cached some images, will it reuse the same images or will it redownload them?

As will use the cached images. It also caches the list of images. That list is only updated every couple of weeks, so new images from a given source might not be downloaded immediately.