1) I've never gotten banned for using a tunneling service (though I understand that Blizzard doesn't offer support for using one, though). I have, however, had my account locked a huge number of times because of the IPs switching.
3) Where I live now my latency to US servers is infinitely better, so I no longer need the server. Were I to live somewhere where latency would shoot above 200ms again, I would most probably use a tunneling service again.
4) Because it really does improve your latency. It all comes down to how your connection to Blizzard's servers is routed, something which is also largely determined by your ISP. In my case, it would look something like this:
Without VPN: 300-380ms
With VPN: 200-220ms