He'll have any and all abilities that he has access to in the games. The only exception would be if transforming into "Devil" was an endgame ability, like Samus' Hyper Beam or Raziel's Spirit Reaver.
No. It's just that you can choose to fight as just Devil or just as Kazuya in the game, so I figured it might not be allowed. He can't normally do it during the fights. He can only do it IN BATTLE in Tekken Tag if you have Kazuya and Devil paired up. Any other time, he does it in FMV scenes.
Then he has the option of choosing which form he wishes to take before his next battle. He'll have both forms available to him, he just won't be capable of changing in mid-fight.