From: Iowan in MD/DC
1) The "Command Radius" of the Air HQ. It is not just Air Flotilla or Air Fleet units - the Air Army units can do it as well. Any unit that is type HQa (and has the Torpedo device in their TOE, although in stock all HQa's have it).
2) It does not matter what command/HQ the air unit is assigned to.
3) You can assign 20 torpedoes at a time to the air HQ. You can also click on the "Show TOE" button at the bottom to be able to set the air HQ to attempt to replenish its torpedo supply every turn. I typically set this number at an amount where my full complement of planes can strike 2 times per day without running out of torpedoes. Sometimes this is a very high number... For 36 Nells, you would want to pull at least 72 torpedoes into the HQa.
Keep in mind that there are other factors which determine whether a plane loads a torpedo for a strike, such as DL of the target and aggression (I believe). A commander may (seemingly rarely) choose not to use torpedoes on a low-value target. You must also have the minimum airfield size. For Kates/Jills/Avengers/etc., you may only need AF 2+. For Nells, which are considered Level Bombers, you will need a larger AF (I think 4, without looking up specifics). If you don't meet the minimum size requirement, then the planes will fly with their reduced load only and will only fly out to normal range (no extended). For almost all planes that carry torpedoes, the reduced load is bombs instead of torpedoes.