Yes, but the 802.11n standard disallows (or at least strongly deprecates) WEP. I think it was disallowed in an earlier draft (and in earlier AEBS firmware), but you're right, the AEBS seems to let you enable it now.Not true. AE is 802.11a/b/g/n compatible and supports WEP/WPA/WPA2.
WEP provides very weak security, but it is better than nothing. While WPA/WPA2 is recommended, some devices don't support it, as the OP states.The issue is that WEP can be trivially broken (on the order of seconds) by commonly available software. It's kind of like putting a lock with only 4 possible combinations on your door - it turns trespass into break and enter, but isn't really going to stop anyone who wants to get in.