Yes, u could replace dry hopping with this method. I did it in addition to dry hopping. U have to use whole hops with this device. I didnt filter it, but it could be done with a custom cut filter pad. There was some small hop debris the first few pours, but no big deal.
Absolutely it can be left inline with your tap system. In fact, thats one of its intended uses and it comes with all the fittings necessary for that. The beer I made with this turned out amazing, the hop character is perfect, exactly what I was looking for. Reminds me of some of my favorite beers (sculpin IpA, stone IPa, lagunitas, two hearted, etc)