IRA distributions?

You are correct that all distributions from a traditional IRA, whether considered principal, interest, dividends, or capital gains, is taxed as ordinary income. Your strategy to reinvest interest and dividends is only for your own purposes of managing your account and has no tax implication.

during the time your IRA is in effect you do not pay any taxes on the income it makes nor are you allowed to claim any losses it might also make

you leave the IRA alone, once you take any distribution it is then income and you will pay taxes on it

you might have an IRA that you can buy and sell the stocks in it to make it more profitable but that is not taking a distribution, that is moving it around within the IRA

If you are over age 59 1/2 or exempt from the 10% penalty for some other reason, then there is no difference.

If you are under age 59 1/2, then the difference is that equal distributions that meet certain requirements may be exempt from the 10% penalty (but not the income tax), while unequal distributions are more likely to be subject to the 10% penalty in addition to the income tax.

No difference.

All money coming out of an IRA is treated the same. In fact, there is no way to differentiate between contributions and earnings when you withdraw the money.

Assuming that the withdrawals are coming from a pretax Traditional IRA, all of the money withdrawn is taxed as Ordinary Income.

Any distribution you take is taxed as ordinary income. It makes no difference "where it came from" within the IRA account.

For a traditional, deductible IRA, all the money in it is treated the same.

Anything you take out is considered ordinary income.