Since Jan 2012, Google has started highlighting search areas in pick color. See the details here: http://googlesystem.blogspot.in/2012/01/highlight-areas-in-google-maps.htm
No. It's not available in the API.
(It may be available in the future. Features of Google Maps do migrate into the API, but Google don't make announcements in advance and no-one has a crystal ball.)
You would need to find the city boundaries and draw the line yourself. Boundary data is almost certainly public-domain for the US. Other jurisdictions may not be so forthcoming.