b) People do, but if you meet a ticket inspector, strictly they're not transferable, so I'm not sure of their reaction.
Oyster▸ Cars are transferable provided they are only pay as you go and not loaded with a Season ticket and provided they do not have a Railcard discount loaded on them.
Oystercard's even with a (Full Priced) weekly season ticket on them are transferable.
The only time they are not transferable if they have a discount of any kind attached to them or previously attached to them.
E.g. PTAC/Priv Oystercards are obviously not transferable. When the discount expires or is not renewed the Oystercard is still not transferable despite it not having any 'active' discount.
The Olympic Oystercards were not transferable and specifically stated that on the back of them.