A. It was an innovation already in the third century when some placed the collection-box inside the masjid. Circulating it is an imitation of the Christians, who circulate collection-baskets in the middle of their masses and services. Circulating it during khutba is about the worst time, since the khutba is worship and counts as two rak`at: is this act part of the khutba? The closest precedent would be when the Prophet, blessings and Peace upon him, required funds for jihad and the women gave their jewelry, but that was a specific, one-time occurrence. What happens nowadays is competition between khutba and the collection for the attention of the congregation, not cooperation. May Allah forgive us.
It is done at the mosque I attend during the talk in English that precedes the beginning of khutba. What I do is ignore it completely, just as if someone were talking and I would ignore them and not even tell them to be quiet, according to the Prophet's instruction if it happened during khutba. The least we can do is inkar [disapproval] of such an act in our heart.
However, if we wish to do more, then we should speak about it, either in addressing the people -- which I intend to do -- or in addressing the board or whatever group is in charge of running the mosque. It may be that they have an excuse, such as a dire need of funds to pay for the necessities of the mosque, and that they found no better way to remind the people to help, than to encroach upon the performance of the khutba, but this does not make it right. Allah knows best.