A. There is no requirement that RMDs be paid in cash. A distribution of assets is perfectly fine.
The fair market value of the asset on the date of distribution will be included in the recipient's income to the same extent a cash distribution of the same amount would have been included. That value then becomes the recipient's basis in the asset going forward for purposes of computing gain or loss on later sale of the asset.
Consider an "in-kind" distribution if the retirement plan is fully invested, with no cash component, and you have no need or desire to sell any of the assets.
Use the RMD to move assets out of the IRA that would be better off in the taxable account, such as a growth asset you would like to gift to your children, or (now that the IRS is moving toward requiring special reporting for hard-to-value assets held in IRAs) a hard-to-value asset you would like to hold outside the IRA to avoid triggering new IRS reporting requirements, or a closely held type of asset that you can foresee may lead to prohibited transaction problems if it remains in the IRA (such as a piece of raw land you have held as a passive investment but now want to develop).