1: By just creating a watch only wallet. Does this expose my bitcoin address, (thus tying my public key to my IP address)? Is anything "transmitted" or is this passive?
It is entirely passive. Nothing needs to be sent anywhere nor registered anywhere.
2: As long as my local blockchain is up to date, can I do step 1 (create unsigned trans.) without being on line? If so does my local blockchain need to be fully caught up or just past my last transaction?
You do not need to be fully synced to create an unsigned transaction. However if you are not fully synced, you could potentially have a problem where the inputs that you are spending are already spent in a transaction that is later on in the blockchain. If you are already fully synced, you can go offline briefly to make the transaction, but I don't see why you would want to do that because nothing is ever transmitted for an unsigned transaction.
3: To sum up, can I get to where I ONLY expose my Bitcoin address at #3.
You have to expose your Bitcoin addresses in order to receive Bitcoin to spend, so no, that's not really possible. If you ignore that, then yes. In fact, you will always only expose your addresses (ignoring the receiving part) when you broadcast a signed transaction.
Note that it is practically impossible to figure out the IP address of the node that a transaction originated from. Transactions are not tied to IP addresses and Bitcoin addresses are not tied to IP addresses. The IP address that you see on block explorers like blockchain.info are the IP addresses of the node that first relayed the transaction to blockchain.info's node. That node is most likely not the node that created the transaction.
