1. Yes, but it depends on your compositor because your compositor needs to be able to run as a nested Wayland client. I think there is support for this in wlroots based Wayland compositors, but I'm not sure if hyperland supports it.

2. I think it will work, but I haven't tried. I redraw the terminal window every time the "termed" window updates. So, if you are playing a video for example and you dynamically resize the window, it should update the size automatically. If you are viewing a static window it might not.