Yes, it's normal for a newborn to feed frequently, particularly overnight - your baby is telling your breasts what they need to do. It is also normal for your breasts to feel a bit painful, as your nipples are not used to all the attention. Use lansinoh nipple cream like it's going out of fashion, it will help! Also paracetamol and ibuprofen if you're really sore. If it's excruciating, then the latch is probably poor - take baby off and relatch, and/or find a lactation consultant or similar for advice. Have you seen the kellymom website? It's full of useful information.
"Best" position depends on you and your baby - try them out and see what works for you. I wouldn't use a dummy this early, but have you looked at safe cosleeping advice? That was the best way that we got some sleep with DD1, and is proving useful again with DD2.
I really, really would avoid giving a formula bottle at this stage if you want to breastfeed. Every moment your baby suckles, he's telling your body what he needs. If he's getting what he needs from formula, then your breasts won't provide enough milk, because he's not asking for it.
My DD2 has been a bit less frantic for hundreds of feeds overnight for the last few days, though there is plenty of cluster feeding at other times. She's twelve days old now, so a bit older than yours.
Congratulations on your newborn! Get some lansinoh, and go to a breastfeeding meeting or similar, and you'll be sorted :) Breastfeeding is bloody hard work in the early days, absolutely relentless and can be quite painful, but it pays off later on - so much less faff (and expense) than formula feeding. Good luck!