You would short for free... for one minute.
No. I would borrow 2-3 times the amount I need, and have the program recycle the borrowings constantly. There would be a steady, interest-free balance for long-term shorting.
The only advantage one could get with that might be clearing out the loans so that your own, higher priced, loan will be taken.
Yes, and in general push the market rate up, as not everyone keeps the Auto-lending feature on.