1 - Probably pretty close. The guy they have doing their FPGAs is supposed to be the best at this sort of thing. However, I don't think any Byuu-type autist who knows all the corner cases of the hardware has ever really tested any of the Analogue FPGA consoles. By all indications they play games fine though. And handhelds in general seem to be much less topsy-turvy hardware-wise than consoles to begin with, so the job is easier.
2 - No, original cartridges only.
The appeal of it is to have one handheld with a decent screen that will play all Gameboy games, plus other unpopular systems like Game Gear and Neo Geo Pocket (in case you want to replicate the experience of placing 4th at Evo 2005). If you can manage to get a Pocket for retail price, it's probably cheaper than getting your GBA modded.