Why is です necessary here ?
I think it just makes the sentence more polite. It's です and not ではありません because とおくない already supplies all the necessary information.
for reference, is not. 遠くない means the same. です here is just for politeness
That would be: "It's not that far (away)."
No, it would be "That one is not far away."
Or rather, it wold be if you wrote それは (sore wa), now it says sore ho, which I'm not sure if it means anything at all...
its それほど , hodo being a descriptor for a limit/extent, so Aki is correct. Sore hodo tookunai would be "That isn't so far"
Is とお... correct. Would it not be とう?
Correct me if I wrong, but from what I learn, some long vowels are written with 'o' (お) instead of 'u' (う).