Interesting. According to Duden, one of the most important German dictionaries, this is in fact the way the word "Sandwich" is pronounced in German. You can listen to it here (scroll down to the loudspeaker symbol):
Having said that, I would never pronounce it like that. Then again, the number of times I've used the word "Sandwich" in German is limited.
That's an interesting question. I think if I had to translate an English sentence, I would probably use "Sandwich".
However, in everyday life, I usually say "ein Brötchen" (if it is small and roundish) or maybe "ein Baguette" (if it is longer). That's more unspecific than "sandwich", though - it could be just bread with nothing else. You can also say "ein belegtes Brötchen" (= Brötchen with a "topping") or "ein Brötchen mit XY". "Ein (belegtes) Brot" might be another option.
There are strong regional differences in the terms for "bread roll" (Brötchen, Wecken, Semmel,...). See this map: http://www.philhist.uni-augsburg.de/lehrstuehle/germanistik/sprachwissenschaft/ada/runde_0/karten/Broetchen.jpg
I wouldn't say "Semmel", but somebody from Bavaria probably would. "Semmel" is feminine, by the way, so it would be "Er isst eine Semmel". :)
Hm... to be honest, so far I've never had this problem as I would never use two slices of bread/toast with jam, just one. I would probably say "Marmeladenbrot" or "Brot/Toast mit Marmelade". The German word "Marmelade" refers both to jam and to marmalade. (Incidentally, I've never eaten peanut butter in my life, but that's of course a different matter. I've only read about in novels.)
Edit: Pons translates "jam sandwich" as "Marmeladenbrot", too: http://goo.gl/5Nlw8