Thank you for your questions.
1. First of all we have an existing site generated using Sitefinty generated menus. This menu generation is reflective of the site level hierachcy. Level 1 items categorise the main item areas and this reflected with the main menu navigation. Does menu structure have to behave as so?
2... I understand that adding alias URLs is indeed a feature of Sitefintiy but how exactly does this impact the SiteMapping/ SEO? Or are there any issues to consider with adding URLs in this manner? Could someone provide me with more information of how this URL aliasing works?
When you create an additional URL, it goes to a URL lookup table. When a request comes to the system, we check if there is such url in the table and serve the page behind it. You are right though that adding more than one URL to a resource could have a negative impact on the SEO, but this is not case always. Please check the following blog post, explaining the URL management - http://www.sitefinitywatch.com/blog/09-01-06/Easy_URL_Management_in_Sitefinity.aspx
Let us know if you have any further questions.
the Telerik team