Quotation marks and other punctuation

While reading about quotation marks at Guide to Grammar and Writing, I came across the following explanation of why punctuation marks appear inside quotation marks.

There are peculiar typographical reasons why the period and comma go inside the quotation mark in the United States. The following explanation comes from the Frequently Asked Questions file of alt.english.usage: "In the days when printing used raised bits of metal, "." and "," were the most delicate, and were in danger of damage (the face of the piece of type might break off from the body, or be bent or dented from above) if they had a '"' on one side and a blank space on the other. Hence the convention arose of always using '."' and ',"' rather than '".' and '",', regardless of logic." This seems to be an argument to return to something more logical, but there is little impetus to do so within the United States.

This doesn't explain why printers in England set type differently, however, and it appears that the FAQ page for alt.english.usage no longer has this explanation. After doing a search for "In the days when printing used raised bits of metal," I see that this explanation is quoted a lot, but apparently without correct attribution.

italics vs. quotation marks

The answer to question number 5 in Exercise 5 says we should italicize the words this and that in the sentence. I placed quotation marks instead. In class we had discussed that quotation marks are fine but I was wondering if there is a preference? Is one form more appropriate than the other? When do you italicize and when do you place quotation marks (excluding cases where there are quotes or implied writer's opinion)?

Thanks,