Shingles and roll material have been cut 1-1.5 inches back from the edge of the drip edge.
This would appear to present an opportunity for moisture intrusion to the decking, no?
Looks like the flashing was added after the fact.
Yep, for whatever reason. Also looks like they sealed the edge with “Hoover Dam in a Can”
If its good enough for a screen door bottom boat, it is good enough for this flashing job 
Yes, improper installation. Greater chance for moisture intrusion.