1. Yes, in the vernacular, it is a "kickoff that can score".
2. Yes, it is live after going 10 yards. But I wouldn't expect an onside kick, as A/K already has the ball!
3. Yes, players should be covering it of it falls short, but if it's 10 yards short, they probably shouldn't have been trying it to begin with.
4. Officials should also remember it's a free kick. The clock starts when the ball is legally touched by either team, but not until. And if it crosses the goal line, it's a touchback.
We once tried one with 2 seconds left in the half. Kick was wide, never touched in the field of play. The ECO correctly didn't start the clock. R should have gotten the ball on the 20 with 2 seconds left, but the WH waved it off and said the half was over. I knew the ECO, and on my way out of the press box at half time, I told him he was right. He says, "I wish you would tell my R that!"
After the game, in talking with the opposing coach, I told him he should have had another play before the half. He says, "We would have just taken a knee. We were so d@mn confused as to what you were doing, there is no way we would have gotten a play called."