> Can UDF really be used as a normal R/W FS on a) Linux, b) Windows?
Yes; it's essentially a 'normal' file system like, e.g., ext2.
> I have only ever seen in on DVD:s, and I suspect OS'es might cheat and not implement UDF features not needed for that task.
The Linux UDF driver defaulted to a 2048 byte sector size which would be wrong for other disk types; this was fixed two years ago. The userspace tool (mkudffs) still has the same bug; you need to remember to specify the sector size explicitly when formatting a HD or a USB stick.
Windows doesn't have this problem.
At that time, there were problems with interchanging data between OSes (IIRC new files created in Linux didn't always show up in Windows); I don't know if this is still the case.