1) As cool as that would be, I can see a number of character-abuse in that. I feel very unsure.
2) The only thing preventing demons is how a kingdom's society or group feels about demons. Some demons can try to blend into human society, but once their secret is it, it would depend on how the people of the village, town, or kingdom feels to determine the fate of the demon. Some would be cruel and annihilate the creature, while others may be accepted under certain rules.
3) Sure, but then again... I guess that is an ability, but it's so small... How would you feel if other people were able to get gems like that on their weapons?

Why does this role play always find a way to just wear me out? I wish I could just fall over without getting hurt X'D