The speed is for each core.

No the speeds are not to be added together to get one large one, it doesnt work that way.

Not sure about the xbox game developers but with pc's the OS handles the scheduling of processes on the cores.

If you would like to know the exact details of how multicore processors works, I can recommend a book that is very boring but explains it all. I had to read the book for my advanced computer architecture class. Part of the graduate curriculum at my uni.
Computer Architecture: A quantitative approach fourth edition