Hi abdul,
Thank you very much for your question.
<blockquote>1. Can JA News component behave like JA News module, so that instead of sections being picked for frontpage, we can pick categories?</blockquote>
Yes.
<blockquote>2. Can JA news component publish categories in a setting where there is 1 leading story with 200×200 pixel image and the following stories use thumbnails of 100×100 pixels… similar to the Teline 2 as in this demo page http://template15.joomlart.com/ja_te…=13&Itemid=197</blockquote>
Yes. With the JA news, you can choose many layout option and the one you mentioned is one of them