It does allow for a certain degree of isolation, hence why Hazō is able to look up at Mari-sensei while his arm continues drawing seals, despite the fact that when he originally recorded the action he had his eyes pointed at the page the whole time.
Note that it can only isolate relatively large groups of muscles at a time -- a limb, the face, etc -- and there is a limited degree of workable variance. Exceeding the variance will cause the replay to fail.
Growing up, Hana warned you that breaking a replay can have major health implications, including seizures, coma, and possibly even death. She wasn't too specific about it and Hazō never felt the desire to push the boundaries.
In theory, yes, but not of the same body part. Moreover, trying to combine different motions can end up simply not working. If you are (e.g.) replaying a block and a kick at the same time then there's no guarantee that the body mechanics will work together. You could end up simply falling on your butt because the two actions move your center of balance in incompatible ways that weren't an issue when the two original motions were performed separately.
No.
