I just tried it out. I can confirm that I could expand the VMFS 3.31 volume with a running VM on it when I connect to the host directly. No problems so far.
Strange that it can't be done via VC with 3.31? If I tear it down and recreate a brand new 3.33 volume, I CAN expand it via VC... Ah well...
Hmm, after just doing this myself, I suspect what it is doing in effect is adding an extent by creating a new partition on the free space and extending the existing volume. Still a step forward in that it lets you use free space on an existing volume instead of insisting on a new LUN.
I don't think so. There's a limit on the number of extents you can add, but I don't believe there's a limit on the number of times you can expand the volume. I suspect what it is doing is more like what gparted or the resizing in Windows 2008 does, which is to actually increase the size of the partition.