1) Its particularly useful where there's large chunks of raid-wide damage that need quick patching.
2) Yes, each bounce counts.
3) Yes, the initial heal counts as a direct heal.

Basically imagine you're at phase3 putricide, two tanks have 3 stacks, the melee's health is falling rapidly. You pop the trinket, fire off a few CHs, and boom, the melee is at full health and holding steady until the effects wear off. Its just that good.

I end up using it at least twice every fight in icecrown, and it always puts out crazy amounts of healing when you need it most.