Yep to both.
Sometimes the defense can dupe you - they can just guess right. The problem is that they can also dupe themselves, such as in this case. The OLB didn't know that the DE was going to guess right and dupe the QB, so he still thinks he has to be on his QB responsibility which is why he's not quite able to get the pitch man.
I agree, but something else happens here. Quay, on his way to the MLB, gets right in the way of the OLB's path to the pitch back. So even if he had wanted to cover Ike, he'd have had to wait for Quay to clear or he would have run right into him.
RG had gift of great vision and could cut right behind the blocker.
If the defense plans this in concert, then it can really screw up the offense. ie if the entire defense is coached so that if they get a particular defensive call then the DE is going to feign taking the BB but bypass to the QB and the OLB then goes to the pitch, then the QB and offense can be in a bad spot. How does an offense combat that? Change blocking scheme so that the DE is blocked or leave the DE unblocked make it a called give read. If the DE doesn't fully commit to taking the BB, a good BB is going to run through his half-hearted effort at worst or run by him untouched at best, and it may be the quickest way to the endzone (a straight line). With a strong inside game, the defense is choosing death by sledge-hammer if they don't commit to stopping the dive. When the defense might be successful employing this is calling it at an opportune/surprising time, and only then.