Great idea! I really like the simplicity and that it's using the established layer 1 mechanics. No need for smart contracts indeed.

1. I might, if I have enough guarantee that the loan will be repaid. Or if there is an interesting project looking for a loan, even if there is higher risk it might fail and the loan not repaid.
2. Yes, I might.
3. I guess the most obvious thing is putting in collateral. And that could be in a variety of cryptocurrencies.
4. It would give one more use case which many people could make use of. It also ties in very nicely with HBD and builds upon its unique features.