According to Donny's posts on this matter, here are my conclusions(and answers to your questions)
1. When you have at least 100 clicks per day from US visitors you get a TQ score
2. hey revise it every week or so
3. The TQ score is being calculated based on the conversion rate your traffic has in the advertisers' websites. The maximum and best score possible is 10, and this is equal to the conversion rate of the Search traffic of Yahoo.com itself. If you have a 10, then it means that your traffic converts as well as search traffic. When your traffic has a lower conversion than that, then you get a lower score (more variables are taken into consideration though, such as niche and god knows what else). The lower the score, the bigger the discount the advertiser gets for a click received from your domains(and the lower the revenue you make - the discount is a few cents per click, again depending on a few variables)
4. Having a low TQ (like 1) for a prolonged period of time might cause problems with your account, I have heard of some cases (in other providers, not sure about parked.com), where Yahoo asks the provider to terminate your account.
I don't know if I am being mistaken in some of the above points, I'm sure Donny will correct me
