You aren't touching the primary line right?
1) First extra line already exists on your account, need to port number into it and upgrade to iphone4. I suggest upgrading before porting as number changes have been known to screw with upgrade eligibility. Since the line is over 30 days old there is a standard number change fee of 36 dollars (easy to get waived) but there is no fee to actually port.
I don't suggest just canceling that line and doing a new activation as an add-a-line for this one.
2) Need to move an AT&T number to your account as a third line, and upgrade it to iphone4. This is not a port, the current acct holder will have to authorize a TOBR (can do this easily online) and the number is simply moved to your account.
3) As for getting fees waived, it's getting harder to get activation/upgrade fees waived in any situation as the company has been giving rigorous training to all customer-facing (in person or over phone) employees teaching not to waive these fees.
My opinions are my own and do not reflect the opinions of my employer AT&T.