1) Assuming your system is properly configured, then yes, it will function pretty much exactly as an internal device would.
2) It depends. They might be a little safer from some forms of internal harm, but they are also more vulnerable to physical damage. But overall I'd say they would be affected the same way as internal drives. See 1 above.
3) The "duplication" mentioned is the fact that external drives need ide to usb translation hardware, external power supplies, possible cooling hardware, and of course, the case itself. All things that are automatically provided to internal drives.
4) Interface speed, along with cost, is probably the biggest disadvantage. External drives will almost always be slower than an equivilent internal. This is mainly due to the fact that the data has to flow through a narrower pipe. Even usb2.0 or firewire is much slower than an internal IDE interface. I doubt very much you'd be able to get the full write speed on a 52x CD drive, for example.
Other things to consider might be the ease or difficulty of installation, the greater use of electricity, possible noise or vibration problems, driver and interface incompatibilities, limited usb/firewire jacks, and probably many more. I'd say, as a rule of thumb, if you have a desktop system, then internal is better than external, as long as you aren't scared to open up the case and fiddle with the insides. Otherwise, go with an external. (Of course, laptop users will almost always need externals.)
The debate is really very similar to the choice between laptops and desktops. Some people need portability and flexibility, and so pay more for less, while others look more for power, and so go for hardware that's not as easy to handle (physically, that is), but is cheaper and more capable overall. In the end, it all comes down to what your individual needs are.