A1: There are no known exploits (if ther are, they would likely be patched quickly)
A2: Wildcard CNAMES work like this: If a more record doesn't exist, follow the wildcard.
https://www.rfc-editor.org/rfc/rfc4592#section-2.2.1
Something else to think about:
glue records: where upstream servers have the IP address of the nameservers for servers using subdomains as nameservers (example ns1.example.org is a nameserver for example.org, so the zone .org. has an A record for ns1.example.org)
Another Example:
We has some school accounts I manage, the teachers use a multi-site wordpress (teachername.example.org), but students also have their own email domain, students.example.org. since records exist for students.example.org for MX, A, TXT and others, the students.example.org does not follow *.example.org.
If the domain that I point *.example.org CNAME to had an MX record, it would only apply to the subdomains that do not have MX records, same for DKIM, DMARC, and others, however per this example the key for dkim wouldn't work as default._domainkey.example.org does not match the wildcard of *.example.org, but rather *._domainkey.example.org.
ALSO,
Can we have multiple CNAMES for a single Name?