Sure it's fine to get by for an hour or two but spending 8 hours 5 days a week on one is a really bad idea and will provide a great path to crippling RSI. In fact using any laptop that much is a bad idea, due to the bad posture it provides (with the screen attached to the keyboard). This is why docking stations are still so important.
Well, it depends on personal preferences.
I usually go for at least 15" in my laptops, but I can believe that other people would be fine with 11" for what they are doing.
The laptop / tablet hybrid is a valid form factor, and these systems are reasonably successful in the market.
Of course, that doesn't mean that they are the right device for everyone.