LorenLuke

SRS only seems to be able to detect the position of the cockpit you started in. So while it may follow adequate rocker position from the pilot seat, I believe the only way to detect the positions in the CP/G seat is to be slotted into it (rather than start as pilot and then swapping seats).

Your sight is in HMD. This only allows selection of SAL/AGM-114Kilo laser-guided Hellfires, which your helicopter has exactly zero of. You need your sight to be in FCR (or possibly LINK, which isn't modeled yet, so I don't know if that's true for switchology or not,) in order to select the RF/AGM-114Lima radar-guided Hellfires.

He's not always smart, reactive, or rock steady, but in short, yes you can. 
The bulk of the George/Petrovich nodes can be done from the flight mode, which basically boils down to 'increase/decrease speed' in stages (64 is 0/40/70/90/120kn/max; don't remember the Hind's), 'increase/decrease altitude' via tens of feet or in meters in the Hind, and then 'point the bird where I'm looking', with some miscellaneous  binds scattered around, e.g. 'line up on my cursor' for the hind to shoot a missile, never mind controls for the hover modes.
Landings might be touchy, but George/Petro is an adequate pilot for over 90% of situations, and certainly far from a terrible toll to utilize in the front seat.

Trajectory is unaffected if launched in LOBL (designated/target detected before the missile comes off the rail) mode. Only LOAL launches are affected.

Both shaky bars and completely closed bars indicate a target lock. Shaky bars is the lock you'll get 99 percent of the time on some unit and is a typical point lock on a target like a tank.
The solid bars are a 'Forced Correlate' lock, which uses the whole picture/scene to generate a lock, rather than the tiny bit of contrast at the center of the crosshairs, (e.g. a vehicle or bunker), allowing it to lock onto locations it otherwise would not be able to lock onto. That said, because it locks onto a larger picture, it won't be able to track any sort of moving targets in the scene, and it's a feature only available to non-IR mavericks. 

It appears that this effect is directly tied to the Super Sampled AntiAliasing setting (SSAA). 
Turning this from 1.5x or 2x to Off/0x eliminated this effect for me.
Hopefully this information helps ED fix this issue. 

If I had to guess, it's probably due to missile smoke ingestion.

Have you tried it in 120kph forward flight?