Is this Open Source?
yup.
Can I program it in C++ Only without having to use any other programming language?
yup. There's a .Net available and wrappers for other languages, but the project started out as C++ so the main branch remains as it.
Can I use AC3D for my project if used with this engine?(AC3D makes .ac files.)
Irrlicht doesn't have a loader for .ac files; still you can export from ac3d to any of the formats Irrlicht supports. Check the features page and formats supported here:
http://irrlicht.sourceforge.net/features.html
and is there naything important I should know before I use thsi engine?
It's not a game engine but a graphic engine. For things like audio, physics or network you'll have to incorporate external engine libraries (though Irrlicht now has internal audio support via Irrklang).
you might also want to check Irredit, the editor for Irrlicht scenes which now has a lightmapper and works for other engines besides Irrlicht:
http://www.ambiera.com/irredit/