Q1:
If North accepts the insufficient bid then Law 27 A 1 occurs:

LAW 27 – INSUFFICIENT BID
A. Acceptance of Insufficient Bid
1. Any insufficient bid may be accepted (treated as legal) at the option of offender’s LHO. It is accepted if that player calls.

This then combines with Law 16 A 1:

LAW 16 - AUTHORIZED AND UNAUTHORIZED INFORMATION
A. Players’ Use of Information
1. A player may use information in the auction or play if:
(a) it derives from the legal calls and plays of the current board (including illegal calls and plays that are accepted) and is unaffected by unauthorized information from another source

This means that East is entitled to make whatever 'feeling' based decision they want to as to the meaning of partner's 3H bid; and bid accordingly. Thus raising to 4 on the asusmption that they felt West intended to bid 4H is perfectly allowed.

Q2:

This gets in to Law 25, which typically relies on the judgement of the director.

LAW 25 - LEGAL AND ILLEGAL CHANGES OF CALL
A. Unintended Call
1. If a player discovers that he has not made the call he intended to make, he may, until his
partner makes a call, substitute the call he intended for the unintended call. The second
(intended) call stands and is subject to the appropriate Law, but the lead restrictions in Law
26 do not apply.
2. If the player’s original intent was to make the call selected or voiced, that call stands. A
change of call may be allowed because of a mechanical error or a slip

A bid that is 100% unintentional can be replaced until the partner's time to bid. A bid that was originally intended to be made, can not be changed regardless of how stupid it is. As a general example, if you ace-ask and find out you don't have enough aces to be in slam - you'll want to sign off. Normally you sign off by returning to 4 (or 5) of your trump suit, which is to play. People occasionally try to sign off by passing the ace-ask response; even if the suit bid is not a playable fit for them.

Because the intent of the bidder was to pass they cannot change this. This also covers people who belatedly remember what type of stayman / weak 2s / ace-asking responses they play, and remember after having made an incorrect bid. Because they had originally intended to make that bid; you cannot allow them to change it.

Here you'd need to judge whether they had originally seemingly intended to bid 3H (maybe over a 2H raise from partner), or if they had an absolutely clear 4H bid. In the former case they would not be allowed to change it, and in the latter they would be able to. (Picture a 5431 16 count inviting game opposite a simple raise, vs a 6331 20 count that partner has raised the suit of). In the first case, as it's not clear that 4H was intended you shouldn't allow it (and there might be UI at the table; depending on what the offending players say), and in the second case I would allow them to retract the unintended bid.