You must understand that красный meant beautiful in old Slavic and that wiki article you provided even mentions that. Only later the word shifted it's meaning to red. Now when we say красный we 99,9% of the time mean "red", not beautiful. But the short form of красный somehow retained its original meaning, therefore when saying красен we 99.9% of the time mean beautiful.

1) Yep, but extremely rarely, up to the point of never, and not in everyday speech. You might come across the word in this meaning in books and that's pretty much it.
2) Might be. Yet again румяный is much more common in this sense.
3) Might be, but we'd more likely use a verb краснеть for that. And if you say - ты красен - that would not mean that you're flushed. That'd mean you're beatuful. But most people won't even understand you this way or it'll take them a while to do so.
4) Can't wrap my head around this one.

There is an idiomatic expression with красен.

Долг платежом красен. It's usually used when you do something good for someone and want them to do the same for you.

— Уж как-то я вам благодарна, так благодарна..
— Очень рада, Марья Петровна, очень рада... ну, а так как долг платежом красен, говорят добрые люди, и у меня также найдется к вам просьбица...

To be frank, it's not strictly a favor for a favor as in a bargain. It's usually mentioned after someone did a favor for someone else. It's like a reminder that someone is indebted to you, hence the word долг in the expression.

Услуга за услугу is used more when there is a bargain in the making. Like two people meat and decide to exchange favors. If one helps the other, the other help the one in return.