Don't Let the Dreams of Another Life Trouble You: Mind Control. When Jason Wyngarde uses it as RANGE, he may count range and draw line of fire from any character he hit this turn and if he hits, after resolutions he can use Mind Control at no cost, but only to target a character he hasn't targeted with Mind Control this turn. (He may repeat this.)

QUESTIONS 1 and 2: Do the follow-up uses of Mind Control have the option to count as RANGE or as CLOSE? If CLOSE is an option, then they do not trigger extra Mind Control uses, right?

Psionic Illusion: FREE: Choose a character on your sideline of 150 points or less (on their highest-point line). Generate a bystander printed on that character's card. Each bystander generated this way has [MAX 1]. You may activate this ability only twice per game.

QUESTION 3: Can older, carded Bystanders go on the Sideline for use with this effect, or are they not allowed due to not having a starting line?

1 yes.
2 yes but as you stated if he uses it as close that's the end of the repeatable chain
3 i think you can use an old bystander but about this probably you should wait gor a purple to answer

Just keep in mind that while you are counting Range and LOF from a different character, being Based for a Range Attack still counts your own base, so you can't use it ranged if you are based, but you can use it ranged if the other character is based. Also, you do not benefit from any IT the other character has.

Emphasis is mine... if they don't have a card with a bystander printed on it, he can't use the power on that figure.
The bystanders from the era of feats didn't have cards with printed bystanders, they were bystanders that came out of cards.

So Jason can count range and draw LOF from previous targets (call them PTs for short); this does not mean he counts as adjacent to people the PTs are adjacent to. In fact, if a PT is adjacent to a viable target, Jason can count range from that PT (of 1) and draw LoF and still make a RANGE use of Mind Control. He could not make a CLOSE mind control on someone just because they are adjacent to a PT, however (and the only real reasons to do so are Stealth or ESD anyways).

The only way for Jason to make a CLOSE mind control during this is if he somehow had Giant Reach, Imp. Targeting: Can shoot out of adjacent or both from a size increase.

If he had the Imp. Targeting, he could start off based but shooting someone else, train through a few targets before eventually CLOSE MCing the adjacent target (ending the train). If he had the Giant Reach, he could be unbased but still have a viable target for a CLOSE MC 2-3 squares away. Larger sizes grant both of these anyways.