I'm just writing what my observations are, but to be honest it works like what I've said.
The phone is on while charging, I usually charge it when I hit that 20% indication. I have 3G, Wifi and Bluetooth on.
Yes I use the phone during the charge, I either txt, surf, or talk to someone over the phone for like 5mins then I let it charge by itself and leave it on a desk.
I don't unplug it right away when it hits 100% since I'm usually away from it and I don't notice it. As soon as I see the plug icon I unplug it. The charger doesn't have auto off as well.
This is the best battery that I've purchased so far, worthy investment if I must say.
I can charge my iPhone four times with a fully charged IMP500 that I use.