Yep. Only a few tablets support USB 3, such as the new Asus ZenPad S 8. I imagine for 1K capture USB 2.0 should be sufficient. One can buy a ton of HD webcams on Amazon that use only USB 2.0.
The OTG cable probably just needs to support USB: its like saying an Ethernet cable must support Skype.
This device is dependent on Web Cam (aka UVC) support built into Android so there definitely no obvious need to root the device.
The Android tablet would just run in Host mode. People have been able to plug in webcams to Android tablets for a while now.
I've actually researched the feasibility of this setup a few weeks ago. There is no reason why a wired system wouldn't work reasonable well. The issue with WiFi based systems is not so much latency, which does matter, but the time outs and drops due to poor connectivity, radio interference and what not. Basically, this device is fancy web cam except that the built in camera is replaced by a HDMI cable input. There should be zero connectivity/drop out issues. Latency should be minimal.
Companies actually sell silicon chips that are called web cam processors. These chips handle all the USB interfacing to the "computer." All the board designer needs to do is wire in a video camera. All webcams have this chip built inside. This particular adapter is just reading the data stream from the HDMI connector, writing this data into a memory/frame buffer and then shoveling that into the web cam processor. Pretty simple actually. Not $400 simple, more like $100 simple.
Practicality is quite subjective. I think many people once thought shooting video on a DSLR was neither viable nor practical. Also, Canon Live View is proof that this idea is feasible because its basically doing the same thing. Also, I am not aware of single Android device that HDMI input. People already have tablets and huge phones. It would seem desirable to at least non-professionals to be able to reuse a nice 8" tablet for for framing if they already own the device and are probably carrying it anyway. That said, $400 seems crazy expensive.
Storing video is another issue. Most tablets don't have SD slots. Also, micro SD media capacities aren't so great nor can you generally easily swap out a SD card on an Android device easily without rebooting the system. More of an annoyance.
I would be concerned with really mundane stuff like does it handle 24p, 30p, 60p frame rates and 3:2 pull down properly. Even a "big" company like Black Magic is having issues with its Video Assist with HDMI out from Sony cameras.
More importantly, is how is this video being recorded. The latest UVC 1.5 standard supports H.264 at best. Since Inogeni isn't supplying the software, what software does one use to record the video? Is it any good? Does it support a H.264 stream?