Answer to Question 1
It's a bad idea. Some students, like Kevin, are quite self-conscious about their poor reading skills
Answer to Question 2
An advantage of this no-feedback strategy is that students may be more willing to experiment with sophisticated vocabulary and complex grammatical structures if they know they will not be penalized for using these things incorrectly. Even so, Mr. Van Holten's decision is almost certainly a bad one, for several reasons:
Students' grammar and spelling is less likely to improve in the absence of feedback.
By giving full credit for written work with grammatical and spelling errors, Mr. Van Holten may be communicating the message that such errors are quite acceptable in students' written work.
Students are apt to be blindsided by the stiff penalty (a 10 reduction in grade) imposed on such errors later in the semester.
An alternative strategy might be to (a) give feedback but not penalize errors when assigning grades to work written early in the semester and