Today me and my friends were playing a scenario involving a lot of elevated terrain. Now any questions I ask from this point hinge on the answer to the following: Can a character with the flight ability that is on normal ground terrain make a close combat attack/action against a character that is on elevated terrain in an adjacent square?

Also, on a different note, another player seems to be under the impression that opponents do not get the points for a used Protected until the character the Protected was originally on is KO'd. Is this correct or incorrect?

(I'm pretty sure I already know the answer for both, but I'd like to hear them so I can show him the thread.)

As soon as Protected is used the points are lost for the user and gained by the opponent as it is "removed from the game" when used...not "placed off the board pending the KO of the assignee" or some-such.

And as far as the flight/elevated question goes: No. Flight does not grant the asbility to melee attack someone at a different elevation than you ala Leap/Climb.

And...

Notice the lack of any stipulation concerning elevations and attacking?

And...

There is the stipulation we are looking for...on Leap/Climb not flight. Hope that helps.

Flight allows you to change your elevation while moving. It doesn't do a thing for you for close combat. So the answer to your question is "no".

This is how the rules used to work. It is no longer how they work. From the rulebook, the first bullet for scoring a feat on page 20 says:
So if you defeated the character, you definitely get the points. In your situation, the character was not yet defeated. For that we turn to the fifth bullet:

So a removed feat is scored even though the characters were not defeated.