4

What happens? Does the bounty get rescinded? Does the bounty-issuer lose that rep? I can't really test that out since I've never seen / it's never happened to me.

8

A bounty "protects" a question from closure - no additional close votes can be cast on a question with a bounty. Of course, if a question really is bad, any user can flag the question for moderator attention, and the moderator can then refund the bounty before closing the question. Since a bounty usually draws more attention to a question, it is assumed that anyone trying to abuse this feature will draw the attention of the moderator before any damage is done.

5

A question with a bounty can't be closed at all. If you need to close it, a moderator has to refund the bounty first, which means the user gets the reputation back.

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