craftgrrl | polymer clay questions.

I was skimming the archives and reading about Sculpey/Fimo/Premo and I came up with a few questions..

What is 'liquid clay'? I was reading some instructions for a project that talked about sealing a jump ring in with liquid clay. Is it thinning out the polymer clay with water [is that possible]?

Some sites have talked about painting the clay previous to baking. I like to paint with acrylics and then seal it. I would think painting with acrylics and then throwing in the oven would be a Very Bad Idea. Yes/no?

Baking. Some people say they put their clay on index cards and the like to bake in the oven. Is this also a bad idea?

Thanks!