Melchior is undiagnosed bipolar, as is his father.
Eventually he'll be driven to taking his father out of his life in the most complete way the law allows, by emigrating to Canada. Undiagnosed bipolar syndrome'll continue to run among his descendants, however, until his great-great grandson Craig finally gets a diagnosis and on medication...
Ilse will grow up to be Satine.
At some point in the 8 years between the events of the musical (1891) and the movie (1899), she ends up in Montmartre, probably following one of her artist lovers. After said lover abandons her, she ends up selling herself on the street until Zidler finds her. Though he and Marie initially take her in temporarily out of pity, they discover her latent theatrical talent and decide to make her a star. Since French was commonly taught to girls throughout Europe at the time, it wouldn't take her long to become fluent given total immersion. Upon beginning her life at the Moulin Rouge, she takes the name Satine and does her best to leave the past behind.
It WAS rape...
But Wendila didn't know what Melchior was doing, so she couldn't exactly protest to it. Essentially, Melchior committed statutory rape even though he's still under aged, because Wendila is still as naive as a child.