1. Yea this should work but is a problem with how PhoneGap handles links.... it should be opening them in a new slide up browser window but is not. I should have a fix for this tomorrow.
2. If you force quit the app (by holding down home button), and then relaunch you should be good to go. I think what's happening is it's losing connection with PhoneGap... i'm hoping this is fixed in the next day or two
The upgrade error is not true in your csae, it was just meant to sniff for a phonegap variable for an older iOS shell, but in this case it's also undefined so it throws the upgrade error.
Sorry about the bugs!