Question 2 is a no-brainer for me - it's not safe to fly it VFR across country.
Things don't always work out as intended, and even on a nice day, the weather can close in on you and reduce good visibility to poor. Without a reasonable compass, you can't steer way from trouble, if you loose track of exactly where you are.
I think you have answered question 1 yourself, if the ME List says "Compass", it has to be fully functioning in the air. And if the aircraft has a C of A, it must have been swung within the last three years to be regarded as fully functioning, so that the compan deviations are correct.