For 1, yes we would definitely need to keep the current certificate functionality available - if we did go down that route then the activity creator would need to choose between badge and traditional (PDF) certificate when they create the activity.
I've sent a message to Mark Nelson (the certificate module maintainer) to get his views - I agree there are some advantages of a separate module but we thought it was worth at least floating the idea given the similarities. We'll add a section to the wiki page with some pros and cons.
For 2, given that the activity creator would be choosing between creating a badge or a certificate, any metadata that is available for creating the badge is also available for the certificate. However given the different methods of constructing badges vs. certificates I'm not sure there would be much scope for code reuse.
Simon