That's pretty close to Blue Lagoon, one of the most popular tourist destinations in the area, which is now closed as a precaution: https://www.bluelagoon.com/seismic-activity
Maybe. Avoided it. Went to Mývatn instead. Turned out that it means midge-lake. Spent 2 days eating flies. They didn't bite but weren't tasty. I've never driven the fuck out of somewhere so quickly.
Well, Myvatn is basically on the other side of the island... Cam only recommend the non-Blue Lagoon hot baths and tubs, easily as good and a lot cheaper.
Maybe, but the surreal atmosphere when the sun rises, you are surrounded by blue everywhere, you are jetlagged from just having landed half hour ago, and you have a drink in hand is indescribable. I went to other Icelandic baths during my stay but nothing matched that experience.