Translation:You eat rice and you drink milk.
Yes, "ye" is the most common 'you plural' found in Hiberno-English, along with a few other variants. You can report it if you like, but I'm not sure if they'll start accepting it. I've already reported one instance of "sibh = ye", but they haven't gotten back to me about it yet (they've been exceptionally quick in general, however, I must say. Each morning I wake up to a dozen e-mails of new translations accepted that they've approved).
But anyway, I too would like if they accepted "ye". In French and Spanish it doesn't bother me as much, but because when I learnt Irish in School it was "ye", I find myself saying it and typing it without thinking. But we'll have to wait and see what they decide.
No. Irish and English both have separate forms for the simple present ("you eat"/itheann tú) and the continuous/progressive present ("you are eating"/tá tú ag ithe).
While some other European languages don't make this distinction, these tenses are not interchangeable in Irish or in English.
When you submit a wrong answer, Duolingo does a crude alphabetic match between your wrong answer and each of the "acceptable alternative answers", and offers the one that is closest to your wrong answer, as if to say "look, you nearly got it right!". Unfortunately, because the contributors were very generous in accepting a range of dialectically diverse suggestions for "acceptable alternative answers", learners often encounter suggested corrections in both Irish and English that, while not strictly wrong, are unhelpful.