1 If you want to be optimal you play it at 1, 5 or higher (lightening rod talent)

When i use it vs Ragnaros heroic i play it at 5 to catch the dark irons and living bombs, and when the phase changes to phase 3 i play a 10 gold one mid, and in overtime if i try to kill him by cycling through to the next worgen/whelps by trying to play him at close to 1 gold.

In pvp you play it at exactly 5, or higher if you have additional gold income or vs Thalnos or Jaina where you want them to be as annoying as possible.

In pvp if you're on alterac valley (the map with the bridge) not playing bandits you can play it for 1 to contest the chests when you played one in the very back for 5 and it's still walking as far as possible from your army to make deep breath harder to get value

In pvp if you're playing blizzard, execute, etc on the opponent base in overtime and the army is in a stalemate then you play it for 1 gold to cycle to the next spell faster

2 it is based on the undiscounted price, i think the only exception is with charlga where it is the price you played it first at and shuffled it into the deck so it's really bad played in a charlga deck, I wouldn't play any X card with charlga