Yes! I recently started doing it and it makes a greater workspace on the desktop. Paired with making the dock shorter and turning magnification on it is the complete package imo. I can't believe I didn't do it sooner!
I don't hide the Dock. Thought about it several times but always preferred having it visible for icon badges and such. Instead I decided to move it to the right side of the screen so I could have more vertical viewing area while still keeping the Dock visible at all times.
Yes, I do hide the dock. I also moved it to the left side of my screen. I just wished there was a little icon on the top bar(next to the airport symbol and such) that displayed if you have a new IM for iChat.
I wish there was "auto hide" mode that is triggered not only by the mouse movement but windows opened. If none of the windows overlap in the dock area, show the dock. Moving the window to overlap the dock (or hitting the green "+" button requires window to overlap) should trigger the dock to hide.