1. Yes, with some exceptions. The Select Shift system will not let you do something stupid like overrev the engine or stall it. If your downshift will overrev it will blink and keep you in the current gear. Also if your upshift is too many gears for the speed it will also blink and keep you in the same gear (for example going 5 mph it will only let you shift from 1-2, if you try 3 it will stop you.)
2. Yes you can shift between M and D as you see fit. You have to push the shift lock button to go from D to M. From M to D you just push the knob back to D. The MyFord Display will switch to a tachometer reading with the gear number indicated if you don't already have a tachometer displayed. In this case it will not go back to your previous display when you go to D. If you already have a tachometer in the display it will add the gear number in red to the display.