Seconded. I used this to prime before I did some armor as well, and I didn't sand the foam itself correctly (my bad), and it kept the texture. On the bright side, you won't lose texture. On the not-so-bright side, you can't fill with it or sand it. (Actually, foam can be sanded on its own, before painting. I've seen results when it's done, but I couldn't tell you how to make it so smooth. It's crazy what people can do.)
Do all your smoothing and sanding first, then use your plastidip before you spray paint. Not using it can melt your foam, so you still want it. Make sure it fully dries before layering more paint on!
For your other questions:
- Plastidip is extremely flexible and holds up well to casual movement. You're more likely to scuff your paint than crack the Plastidip. I scuffed my armor on purpose for a battle-worn look, and it came out totally fine.
- While there is a paint-on version, I've never used it. You're running a higher risk of drips there, as the cure time is pretty long (4 hours per coat). Most people use the spray paint, and just layer it fine multiple times. It takes a while outside, but it'll be worth it. It comes in a small handful of colors, but I used black as a base since I wanted mine scuffed. Again, think of it as a base coat and go with your gut. I would never use a red base unless the whole armor was going to be red, for instance.