It might be too outdated to do major services, but it’s still fine for its original use - interfacing with electronic components.
You could build a weather station, monitor temperature and humidity in your attic and crawlspace, automatically water plants, etc. You don’t need much electronics knowledge for that sort of thing.
I don’t believe so - the docs mention several ways to boot a pi but most only work for newer models.
An option might be to boot an SD card read-only and run everything over NFS. It’s trivial to do that sort of thing with some UNIX clones (OpenBSD, for instance), but I don’t know about a modern Linux.