1) Can the USCIS deny the extension without issuing me a RFE?
It may, the regulations do not require an RFE. Seldom however does it flat out deny an employment petition without giving opportunity to fix it.
2) In case I get a RFE, I can keep my bags packed and be ready to leave. But will I have to leave the same day or do I get a day or two?
USCIS gives you 30 days to depart before your unlawful presence begins to accrue towards the bar.
3) I may need to visit Canada for a day or two in the next week. Will there be an issue while entering the US, since my I94 will be expiring in a month or so? Is there a chance that I may be granted a new I-94 expiration date on entry?
If you leave the US with a pending extension you cannot re-enter until the extension is approved. You abandon the extension of stay with departure. If you are out of the US you have no stay to extend. So the petition part can be approved but you will need it to be approved and if visa is expired a new visa stamp.
You can go to Canada before it expires and before an extension is filed but you need to return before the I-94 expires or you are stuck out of the US.
You have to wait for your extension to be approved and get new visa stamp at US Embassy in Canada.
4) Does form I-129 extend the L1B validity itself or just the I-94 expiration date? Is there a difference between the two?
It does both. It bifurcated. One part is to have the petition approval extended with new validity dates and there is also another part on the I-129 that is checked to extend one's stay in the US which is to issue a new I-94 attached to the I-797 approval notice.
Your positive rating is very important to me as we are not on salary and that is how we receive compensation, you choosing a smiley face or 3+ stars
In the future, you may begin your questions with “FOR JUDITH” and I will be your personal immigration expert.