I want to do 1 gallon batches to start.
Can I ferment right in the 1 gallon jug?
Yes and a good place to start to learn how to make mead
How much head space do I need to leave in the 1 gallon jug?
Will it blow out the air lock like beer?
Not a lot is required, if you start with a traditional mead, if you think you want to have fruit in the primary then you'll be better off with a blowoff tube instead of an airlock, fruit causes the most pressure and foaming during primary fermentation and can blow out an airlock, it's becoming more common to add fruit and flavorings during secondary not only for this reason but also for better transfer of flavor, color and aroma.
3lbs honey per gallon a good place to start?
Depending on whether you want a sweet or dry mead this can change but 3 pounds per gallon is sort of the basic starting place
Suggestions on yeast that works good for mead?
Like onihige mentioned, it'll depend on they type of mead you are making, what alcohol level you want to shoot for, how much honey you are using etc...
here are a couple of links about yeast
http://www.winemakermag.com/guide/yeast
And since I am a huge fan of lalvin strains
http://www.lalvinyeast.com/strains.asp
besides asking questions and reading posts here, another great resource for online information is the gotmead newbee guide.
http://www.gotmead.com/index.php?option=com_content&task=blogcategory&id=108&Itemid=14
A great book for information on honey, fermentation and ingredients is Kan Schramms "The Compleat Meadmaker" (although even the author admits some of the techniques are outdated)
http://www.amazon.com/dp/0937381802/?tag=skimlinks_replacement-20
ask as many questions as possible before your first batch, learn about sanitization, mixing must, proper temps, rehydrating yeast, aeration/degassing, nutrients, using a hydrometer, how different yeasts work for example some are finicky about temperature some are better for stuck ferments than primary fermentation. I know it seems like a lot but really it all comes together and isn't teribly difficult or tons of work, just important little things to getting off to a successful first batch and begining the obsession (yes it does become an addiction)
Good Luck and welcome to mead