Absolutely. I would never recommend any of these offshoots over stock. You can literally set it up the same exact way if you want, but still get same day security patches and updates.
Only reasons if heard is faster updates if you use base Firefox (w/ arkenfix user.js). Also the styling (brand icons and such) for librewolf are detectable. Mullvad is better than librewolf for antfingerprinting.
Yes it does both of those things, Librewolf is just Firefox pre-configured for privacy. You could use Librewolf or you could configure firefox yourself to be equally private, Librewolf is just taking advantage of the features built into FIrefox but left optional for users.
This website has a really extensive writeup on Firefox privacy and security hardening that I learned a couple of tricks from.
Besides that, you can search the Mozilla support forums as there are tons of threads there with questions and answers about Firefox privacy and security.