Yes it can.
Many smaller installations use their master server as a media server also. It will only become an issue if the Catalog processing time interfers with the data movement processing and vice-versa.
Yes but ... Do not do it. I had the exact same configuration where my master was also a media server. I had a lot of unexplained communications errors 53, 54 etc - In the end it came down to the master being too busy and timing out. After I moved the media server part off, no more issues.
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