The 1/2 strength provides significantly more highlight blooming and contrast reduction than the 1/4. It is used for a more stylized, 'dreamy' look rather than subtle skin smoothing.
No, the filter is designed to work seamlessly with phase-detect and contrast-detect autofocus systems without causing hunting or lag.
The filter is not officially waterproof. While the glass is durable, moisture can get trapped between the filter and the lens, so it should be used with a weather-sealed lens in rain.