What if you pay someone after mixing these funds, this someone goes into an exchange, deposits the coins and the exchange is triggered due some flagged coins? This person will then point at you as the source of the funds and now you are in trouble. How do you avoid this?
You warn him that if he deposits your bitcoin in a centralized exchange, he might have his coins censored. I personally haven't experienced a situation where the merchant asked me for the source, or "pointed me" as the source, even though almost all of my bitcoin were mixed. When the merchant uses Coinbase or BitPay, I simply refuse to pay him on-chain.
2) In order to send the coins into the Android software, you have to transact from Bitcoin Core, into the mixer, then into the Android software address. This is a lot wasted in fees. There is no way to save some money in this process?
You could swap BTC for XMR, and then back to BTC in separate addresses. Perhaps that's less expensive.