Is the handle on the top of the bag? Or is it on the seam where the top of the bag meets the back of the bag? Is it the same material as the bag?

The handle is on top of the bag. It is the same material as the bag but is of stronger construction. Well made, not flimsy at all.

Will an iPad 12.9 with protective case/cover fit in this bag?

i have the ipad pro 10.5, and it perfectly fits. however, it was tight to fit my macbook air 13. overall it did fit with a major squeeze. i would say dont even thougbh a macbook air 13 can. it perfectly fits an ipad pro 10 or a macbook 11

Will this bag fit a dslr camera in the biggest compartment?

Yes. My Nikon D600 with 16-35 zoom fits nicely. If you want a dedicated camera bag, consider the Pacsafe Camsafe V8, which is also excellent.

The third picture here shows an iPad placed next to either a towel or padding---which is it? Anyone know?

The material shown in the third picture in the middle of the case adjacent to the iPad is not an integral part of the case - it is a towel or sweater or other object, not a part of the case. The case has no electronics padding.

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