it's pretty much the quickest way to get it done. I've heard stories of people stripping the skin off the tail though (yes, just the skin! gross...), so just grab it close to the base! I don't see how it could be any less humane than CO2, it's just the more hands-on approach
Yea you need to grab by the base or grab the rear hips...
1) Yes it is a great, even on large rats. It is the preferred method in fact for dispatching meat rabbits at rabbit farms, so is still good for even larger animals.
2) CO2 is tricky to do right, and using baking soda+vinegar or dry ice gives you practically no control over flow, which I don't like.