1. As she is not having any pay stubs from her consulting company, is she considered out of status right now even though she is holding EAD and AP based on my pending I-485 application?
yes if she is violating the visa rule with no pay. But she now has filed for her 485 as your dependeant, she is eligible to stay in the country as an adjustee.
2. Can she come back to USA on her Advanced Parole based on my I-485 application?
Yes she can come into the country with her AP based on her 485 application (she will need to have the 485 receipt as well) not yours.
3. I will be using my AP for re-entry, meaning I will be also on parolee status. After coming back from India, can I apply for her visa transfer from her H1-B to H4?
With an approved H1 petition but no stamp , you can reenter using an AP and continue to stay here on your h1.
She can stay in US as an adjustee, she doesnt need a H4 until her 485 application is approved or a decision is made.
4. Anyone foresee any issues while we come back from India?
Nope, unless you guys dont have your AP and your 485 receipt while re entering.