Question 1:

What do verses 1 & 2 tell us about the context of this message and Jesus' listeners?

Jesus is teaching His disciples in this passage. The passage clearly says that there was a large crowd of people, but Jesus is teaching His disciples. The poor and the destitute made up this crowd, as Matthew 4:24&25 states:

"News about him spread all over Syria, and people brought to him all who were ill with various diseases, those suffering severe pain, the demon-possessed, those having seizures, and the paralyzed, and he healed them. Large crowds from Galilee, the Decapolis, Jerusalem, Judea and the region across the Jordan followed him."

So, it is of these people that Jesus speaks. The target of the lesson is his disciples, but the 'poor in spirit' in this case I believe to have been the large crowd who had nobody else to turn to.

I can picture Jesus surrounded by many sick and infirm. The thought comes to him 'these people are blessed as they recognize me for who I am' which is what he teaches His disciples.

What do these verses tell us about Jesus?

This reminds me of the passage by C.S. Lewis:

"A man who was merely a man and said the sort of things Jesus said would not be a great moral teacher. He would either be a lunatic - on the level with a man who says he is a poached egg - or he would be the devil of hell. You must take your choice. Either this was, and is, the Son of God, or else a madman or something worse. You can shut Him up for a fool or you can fall at His feet and call Him Lord and God. But let us not come with any patronizing nonsense about His being a great human teacher. He has not left that open to us."

Jesus is passing judgment in these passages. He is saying that the poor in spirit will enter heaven. Only God can categorically state who is going to be entering the kingdom of heaven. Prophets and philosophers can state their opinion, but Jesus is beyond that. He states this here and clarifies his authority at other times in his ministry.