I have a sloop rigged boat that uses a convertible inner forestay.
1) the "cutter sail" is hanked on to the inner forestay.
2) you are correct, the mast is in a conventional sloop rig placement, i.e. slightly forward of a true cutter rigged boat.
3) It is good alternative to a cutter rig. It allows the flexibility to use shortened sail in brisk winds (30-40-kt), and keep the forces of the sail close to the center of resistance of the boat. There is of course good reason to not have two stays on the foredeck - which will be apparent with every tack that you take using the headsail which you will fly > 95% of the time.
By the way... "An inner forestay attached to a sloop rig will not be strong enough". You can use it with light air."
The whole purpose of the inner forestay is heavy wind - the mast support is augmented with running backstays while using the "cutter sail".
The "cutter sail" rigged to the inner forestay will easily outperform any partially furled headsail (even one with a foam luff shaper) in brisk winds. In normal conditions (i.e. >95% of the time) having a clear foredeck on which to easily tack a jib or genoa makes the convertible stay a "healthy alternative" to the cutter, precisely because you can get rid of it!