Here is the website for the muscle plug in: Comet LLC
If you go there you will find videos that show the muscles in action. They have a nice little demo video set up that shows a dinosaur with no muslces then after the muscles were installed. Wow! what a difference!
To answer your questions:
Yes. You can use blendshapes and all of Maya's deformers on top of the cmuscle skin node.
You can use as many or as few muscles as you want... Actually, you don't have to use any muscles at all. You could choose to just use the skin sliding feature or the jiggling or skin wrinkles. The skin not is very dynamic!
One other thing; after you set up your animation with a character that uses cMuscles, you can play it and render it on another computer by simply installing the free cMuscle "player".
There is a demo version of cMuscle available at their website! It limits what you can do but it does work and it does come with the complete users manual. Check it out...
The thing about muscles is that it is tempting to have the muscles really bulge or jiggle just so you can clearly see them working but I think that for more realistic results, the muslces have to be set up to act like real muscles. That means that they don't usually move enough to be very noticable. They are there and they are working but they are subtle... It's a very subtle effect. The main reason I decided to use the muscles is because I wanted to make sure that my models have chest and back muscles that move when the character lifts its arms. Like I said; I have made a few mistakes with the alien model that I've shown you. If I had to do this one again, I would have modeled its chest smooth then added the muscles to give it shape rather than modeling the muscle shapes right into the model's geometry.
I'll be doing an animation test soon. It should show the muscles in action. Especially around the shoulders, chest and back areas...
Thanks for the support and interest, guys..