I posted this in another thread, but pertains to your questions:
Studies of performance enhancement in hypobaric chambers, which result in much lower oxygen levels than altitude tents, show minimal to no improvements. With acute hypoxia, EPO is only increased during the period of hypoxia, not immediately afterwards or in the long term. With chronic hypoxic episodes (90 minutes at 5500 m, three times a week for 3 weeks), there was a significant increase in hematocrit from 42.5% to 45.0% which persisted for 2 weeks after the end of the hypoxic treatment. (See Rodriguez et al: Erythropoietin acute reaction and haematological adaptations to short, intermittent hypobaric hypoxia. Eur J Appl Physiol, 2000).
But there are other mechanisms, such as tolerance to lactate and improved anaerobic metabolism, which improve performance following altitude training. However, this is quite controversial in the scientific literature, with other researchers claiming no or little benefit to altitude training:
"While living at altitude but training near sea level may be optimal for enhancing the performance of competitive cyclists, much further research is required to confirm its benefit. If this benefit does exist, it probably varies between individuals and averages little more than 1%." (From Hahn & Gore: The effect of altitude on cycling performance: a challenge to traditional concepts. Sports Med, 2001)
And "In general, altitude training has been shown to improve performance at altitude, whereas no unequivocal evidence exists to support the claim that performance at sea level is improved." (From Bailey and Davies: Physiological implications of altitude training for endurance performance at sea level: a review. Br J Sports Med, 1997)
Moreover, there are dangers, as there is to doping, with training at altitude including "decreases in absolute training intensity, decreased plasma volume, depression of haemopoiesis and increased haemolysis, increases in sympathetically mediated glycogen depletion at altitude, and increased respiratory muscle work after return to sea level...The possible implications of changes in immune function at altitude have also been largely ignored, despite accumulating evidence of hypoxia mediated immunosuppression." (From Bailey and Davies: Physiological implications of altitude training for endurance performance at sea level: a review. Br J Sports Med, 1997)