If you have a way for the player to die, add a variable called lives and make it so that when they die lives goes down by one (lives -= 1 and if lives is less than one, actually execute the code that kills them. If you want to have something happen when they lose a life put that in between <lives -= 1> and killing the player. lives -= 1; doSomethingWhenTheyLoseALife(); if (lives < 1) { killPlayer(); }
As for saving, use SharedObjects.
As for customizable character, it really depends on how you programmed the character.