Yeah it's true that it gives an advantage in that sense. But it's one option among many that give an advantage vs players using default settings, such as: archetype, archetype v2, whitemaps, regular damage counter. So, like the other options, I don't think it's as bad when everyone has the option to use them. But for the future, we could make it disappear when an enemy is out of sight / behind a wall.
We will test different colors for different damage and see how it looks.
Maybe in future.
Due to the way it works, currently, no. It would be pretty delayed when spectating others, like the damage counter when you spectate others, which is also very delayed sometimes. Maybe in future.