Gray wolves, red wolves and coyotes can all interbreed. There are no 'lines' there.
Yes, it is very arbitrary where species lines are drawn in living animals. How much more arbitrary where only fossils are available? Much.
Yep, also sympatric, allopatric and parapatric speciation.
The real question (and one that evos don't have a good anser to) is, "Why should erecting reproductive barriers to genetic variety (speciation) be considered evidence 'supporting' evolution when we all know that access to genetic variety is what helps ensure a population (or species') reproductive success and fitness?"
The lines are arbitrary for the same reason that the lines you draw between relatives and non-relatives are arbitrary.
Yes, in fact red wolves may be a gray wolf - coyote hybrid. Interesting discussion in wikipedia about wolf taxonomy; the upshot is that the experts disagree.
Yes, it is very arbitrary where species lines are drawn in living animals. How much more arbitrary where only fossils are available? Much.
There will always be lumpers and splitters. Whether wolf/coyote fossils are classed as one species with local varieties or subspecies, or as three closely-related species, doesn't matter very much; they are clearly related to, but not the same species as, say, hyenas.
The real question (and one that evos don't have a good anser to) is, "Why should erecting reproductive barriers to genetic variety (speciation) be considered evidence 'supporting' evolution ...
It isn't; it's part of the mechanism of evolution. It's important to avoid ambiguity here: let's agree that "reproductive barriers" means that otherwise suitable individuals from the two different populations don't produce offspring under natural conditions, either because they don't mate or they're not inter-fertile. It doesn't mean the mountains, rivers, specialized niches, etc, that isolate populations of the same species.
If two populations are isolated from each other, eventually enough genetic and/or behavioral changes will accumulate that a reproductive barrier is formed and unambiguous speciation occurs.
Part of the evidence for common ancestry is the existence of all degrees of inter-fertility in various animals, ranging from the wolf/coyote case, to domestic horse/donkey whose offspring are almost always infertile, (a few mules actually are fertile), to domestic horse/Mongolian wild (Przewalski's) horse which always have fertile offspring, even though they have different numbers of chromosomes. And don't forget the ring species phenomenon.
Sure, it's possible to say that the common ancestor was a "created kind", but this leads to absurdities like claiming horses and donkeys are the same species (since they are occasionally inter-fertile), even though the Bible and Koran distinguish them. Or lions and tigers, wolves and hyenas, ... Go with the evidence! There really are *all degrees* of relatedness.
... when we all know that access to genetic variety is what helps ensure a population (or species') reproductive success and fitness?"
This is true. A small, inbred population is likely to go extinct. But not all of them do. Also, especially if the environment is changing, the small population may be able to adapt more quickly and will eventually replace the original one (this is one of the forms of punctuated equilibrium - the fossil record usually (but not always) looks like there had been a "sudden" replacement of one species by another.