Yes, lawsonia inermis and no it is not bad to use it in its pure and natural state. In fact it is much better because some henna's have chemicals added to it.
But I suggest you carry out a strand test if you're going to henna your hair, to see how your hair will react to it.
Yes I have used henna before and loved it. My hair was thick and strong. Also it helped with shrinkage. I wish I could hand make my henna. One day I will. And by make I mean grow and crush and sift myself.
Yes, right now I have BAQ Rajasthani henna in my hair. Yes, it can and should be used in it's purest state.
ETA: Just in case you want to know the mix it's BAQ Henna, hot water, lemon juice, ACV, olive oil, tea tree oil and honey. This mixes into a very smooth and creamy paste with a sorta camphor smell to it. Feels great on the scalp too