Can a ship use an ability that it doesn't have if an upgrade allows the action? R7-T1 allows for a Target Lock+Boost...would that mean that Wedge could Boost even though the X-wing lacks the Boost icon? Same thing for Fire Control System on a Tie Phantom. Would the Phantom get it's "free" Target Lock?

Absolutely. Otherwise Expert Handling would be kind of pointless.

The upgrade card is instilling the ability on the ship it is on. It is just not formatted in the "add this action to your action bar" as it would not be as limited (and worth a different value of points) than how it is configured on the upgrade card.

Example: Full boost is 4 points with Engine Upgrade but R7-T1 is only 3 points with a boost limited to after a TL to a ship in arc at range 1-2.

Sergovan nailed it again! This works in the same way that Col. Jendon or Dutch Vander can grant a target lock to a ship without that icon (though I don't think there are any rebel ships that don't have t.l.). Or with the incoming Jake Farrell, who can dance his A-Wing into a barrel roll it normally couldn't perform (when the condition is met).

Sidebar: why aren't more people excited about Farrell? 3 actions (with ptl for 1 pt when combined with refit!)? Yes please!