How long does it take your rating to catch up?

I've only played a few games but already I see projected changes to my rating are very small. Even playing someone 200+ points higher than me, I'm projected to gain about 11 points.

I have absolutely no idea what my real rating should be, and I fear I messed it up since my first ~5 games I played really badly as I hadn't played for 20 years!

I don't feel happy challenging people with much higher ratings than me, but then I don't know how to equate rating difference with skill difference.

Any advice? Does it even matter?

Your rating? No it doesn't Matter just play a lot and it will go where.it should be

How long? Well rating accuracy is determined by sample size of the number of games played.

I would say after 100 games or so, you'd have a pretty good idea of what your rating is. So how long depends on how quickly you play these games.

I suppose if you improve as you play, it will take even longer.

Roughly how many rating points separate each 'level' of player? 

You are what you are

I don't really care what my rating is but it would be nice to know, so I know a good level of opponent to play

I assume you mean your Online/Correspondence rating.  Your RD (rating deviation) is fairly low, at 69, so you shouldn't expect a very large rating change, from any specific rated game, even with a large rating disparity.

The thing is, you will occassionally win against players a lot higher rated than you and the rating system takes that into account. If you start consistently beating those players, your rating will go up.

The other side to it is the RD of the opponent you beat that is higher rated. If they have a high RD then their rating is considered less accurate and you won't gain as much from beating them.

My current online rating is 1581, if I created an open seek I would make it available to opponents rated 1500-1881 (closest 100 down to my rating +300). I might improve or not; I might perform better or worse against my opponents; but I think that my rating will correct itself over time and hopefully not be too inaccurate.