We can only understand those things that God has revealed, but those things that God has revealed are ours.  Yet some things seem to be too high for us.  In those cases, as in this case, we just believe God.  He cannot lie.  

Yes.  We are supposed to be conformed to the image of Jesus.

For whom he did foreknow, he also did predestinate to be conformed to the image of his Son, that he might be the firstborn among many brethren.  Romans 8:29 

Yes, he knew you before you were born.

This is predestination based on foreknowledge.  He knew that you would be faithful, so he predestined you to it.

This is predestination to be conformed to the image of Jesus.

This is a destiny to be like Jesus.