1) Yes, but nobody will really care, especially if you disclose as much before using it.
2) Depends on how you do it, and it depends on what it's used for. If you're using a code that, say, forces eggs to be female, then the game will probably skip over PIDs until it finds a legal female one, which wouldn't set off any flags on a hack check. If you're altering a Pokemon that already exists, that's more questionable and probably harder to make legal. In either case, it can probably be traded and used in wi-fi battles with no problems, but poorly hacked Pokemon will set off flags on Battle Recorder uploads and wouldn't pass through an official tournament check. (I may or may not be pulling stuff out of my ass, here. I don't have much experience with editing Pokemon.)