Yes — chapter starts in the EPUB (signaled by epub:type="chapter" or h1 / h2 headings) become MD Heading 1 styles, ready for outline view or automatic TOC regeneration via Word's built-in tools.
Yes — every illustration in the EPUB is extracted as PNG / JPG and embedded inline in the MD at the same anchor point as the original. Word / Pages / LibreOffice render them inline; you can right-click to resize or replace each one.
Yes — popup-style footnotes in the EPUB become real Word / RTF footnotes in the MD (Insert → Footnote round-tripped). Endnotes become endnotes. Cross-references stay linked between the body text and the note.
Will the MD include the cover image from the EPUB?