What that means is that people in China will still not be able to see unfiltered results as the Chinese Hong Kong version is blocked from the mainland. Google Hong Kong is uncensored just like most of the world.
No, it's not blocked (yet) - but queries with certain keywords are being filtered as they always have. It appears the keyword filtering is now more severe, as I've mentioned elsewhere.
Because it costs money. An https connection requires an order of magnitude more resources to set up and maintain than a plain old http connection.
Even with hardware acceleration it takes more electricity per connection, and dedicated SSL accelerator boxes are not cheap (a pair of load-balancers with SSL acceleration will cost more than a new car).
When you're operating at the scale of Google, that can add up quickly.
Probably not smart to tell the government you'd like to hide your comms from them. Although if everyone did (e.g. it was built into the browser) then it might be hard to figure out who to watch.