It works just fine for that application. But: it is a little bit more expensive for the same capacity, and unfortunately the voltage is a little bit lower so it isn't a drop-in replacement.
Yes, about 50%. So for the same amount of energy you need a larger and heavier battery. Typically the largest capacity Lithium Ion in 18650 format is roughly comparable to a 26650 LIFEPO4. And then there is still the voltage difference (nominally 3.2 for LIFEPO4 and 3.6 for Li-ion).
The 50% or so difference is when both batteries are new. From what I've read Li-ion degrade faster than LiFePO4, so the difference becomes smaller over time (and might even reverse, but I don't have actual data).
> otoh on the weight of the whole bike it isn't a huge problem.
Why do you say this? Non-ebikes can be sub-16 lbs; ebike battery packs can weigh, like, on the order of 50 lbs. Ebike users sometimes need to lift the bikes (up stairs at home, or on/off transit).
Battery pack weight absolutely dominates the design and utility of ebikes; any double-digit percent factor is very relevant (IMO).
A really large e-bike battery is 4kg. Nobody is riding an e-bike with 50 pounds of batteries. Even the battery pack on a Zero FX, an electric motorcycle, is only 42 pounds.
That's because the motors are pretty heavy as well, and once you have that much torque available you'll need a frame and rear hub that can handle it too. My biggest e-bike is about 30Kg including a 2.2 KWh battery. Not quite 75 lb but getting there. The basic machine is a Riese&Mueller charger with a Bosch speed pedelec motor and the usual complement of brakes, gearing and bunch of bags. I don't mind the weight, but I've yet to find someone else that likes that bike. It's a bit of a pain to move around with the motor off but once you're on it and riding it's just like any other bike only more powerful and it lasts for a really long time on a single charge.
I don't know either. I think part of it is that some e-bike customers are not otherwise bike buyers and go for the niche of huge-wheeled quasimotorcycle. I recommend keeping e-bike weight under 50 pounds because it is the design limit of the bike carriers on American buses and on Amtrak. There are plenty of e-bikes under 40 pounds even.