As a level 80 thief experienced with endgame PvE, I can answer your first two questions.
In a group, a thief can play as DPS, or as support. My favorite for DPS is a condition damage oriented Death Blossom build, utilizing extensive initiative recovery, similar to the build you envision. Personally, I go for 30 Acrobatics, 20 Trickery, and 20 Critical Strikes.
The thing I love most about the thief is the synergy between traits. For example, here’s my build:
This build is focused on extreme mobility (in my opinion, one of the thief’s biggest strengths) and damage output, while also boasting exceptional survivability. Every time I dodge, I gain swiftness and might (might also increases condition damage). Dodging will also cost less endurance due to Acrobatics. You gain additional might through stealing, which also grants initiative, swiftness and fury. Your fury, in turn, will proc your critical hit initiative gain trait in Critical Strikes, allowing you to use Death Blossom more, giving you more evades and survivability. Critical Strikes traits will stack ridiculous amounts of might upon signet activation, increasing your damage output while also regaining initiative for more Death Blossoms. You have another dodge skill on your shortbow, meaning that you have a ridiculous amount of ways to stay alive.
If that wasn’t enough, Signet of Malice has insane synergy with Death Blossom and Dagger Storm. Death Blossom will heal me for at least 300 HP per mob hit, while Dagger Storm + Signet of Malice enables me to face hordes of enemies without losing any HP. Speaking of heals, you will be consuming initiative like no other, so the Acrobatics trait that heals on initiative use is a godsend. Synergy at its finest.
An alternative route you can go is dropping Acrobatics and going for Shadow Arts. In this sort of build, you utilize stealth for survivability and initiative recovery. Still very synergetic, but does not fit my fast-paced playstyle.
In summary, as a thief, you should almost never get hit, you should dish out a lot of damage, and you are able to heal back a lot of damage. You have a ranged option in your Shortbow set, which I’m sure you already know the power of. Though the Thief has many ways to recover initiative, it is impossible to spam Death Blossom forever. When you run out of initiative, you lose a significant amount of survivability, and in dungeons, you must fall back onto your ranged set. I normally will blow all my initiative, dodge roll away, fire off some Shortbow skills, and then go back into the fray. This leads me into the Thief’s supporting role in groups.
The thief has access to one of the best blast finishers in the game: Cluster Bomb. In addition, he gets a field to complement that: Choking Gas. Combining these two skills will create AoE weakness, which is VERY powerful in dungeons. The lack of cooldowns means that you have a spammable Blast Finisher, which is simply amazing. Rolling with a Guardian will mean constant AoE Might and Retaliation. A Ranger will enable you to heal your party in an area of effect. Elementalists will give you the ability to shield your entire team with Frost Armor, or grant AoE Swiftness. In addition, you will be using Death Blossom constantly, which also doubles as a Whirl Finisher. Combo Fields are an essential part of high level PvE that many seem to ignore, but they are also one of the most powerful mechanics parties can utilize.
Going back to the Dagger set for a moment, I’d like to point out that your Dancing Dagger skill is a multi-target cripple. In dungeon instances where kiting is basically mandatory, cripples do a lot to help your team.
In addition, Shadow Refuge, Smokescreen and Scorpion Wire are very useful utilities for a more support-oriented thief. With Shadow Refuge, you can revive downed players without fear of being attacked. Smokescreen will help your team immensely against ranged mobs and creates another field for your team to work with. Scorpion Wire is amazing in certain dungeons, as it allows you to pick apart harder groups one by one. Venom Sharing is also an amazing trait to use, as the damage output and CC it provides to your team is invaluable.
I answered your questions a bit out of order, but I tried to cover trait lines, survivability and group play.
(edited by Fate.5723)