All that shell scripting needs is the ability to spawn processes and connect their stdin/out/err together. Or at least, that's what distinguishes "scripting" from "shell scripting". Obviously, you can write a library (I like Python's Plumbum) in almost any language you like that provides this functionality conveniently. So, again: yes, Red can be used for that just as well as any other language (and, arguably, it may be better for this use than many others).

For an interactive shell, you also need a REPL, which Red provides. So if you write that library for Red, you get the interactive shell for free.

Yes, Red has many advantages: it can AOT compile to native, it's homoiconic, it has a built-in Parse dialect (so the library can be really ergonomic), the Red executable is tiny and starts up fast, it has native GUI capabilities (if you're in a Red-based shell and want to view an image, it's trivial to create a GUI window and display it there). I'm not saying Red would be a bad choice. I'm just not sure it would be my choice, given the existence of, e.g., Chicken Scheme or Smalltalk/X.