Separating empathy and apology can be difficult in Japanese. Hell, it would sound weird to say "I empathize with you," even in English. We say "I'm sorry" too, don't we?
Like Taro said, taihen desu ne (that's terrible, that's too bad) is a good expression and the "ne" makes it sound less like a commentary and more like empathy.
Then again, I confused the hell out of my girlfriend when she said "I'm so sorry" and I said "It's not your fault"
The words you had in question 2 might be archaic, I've never heard/used them