I don't have a Palma, but I have a Book Go 6, which looks like it has similar display tech. So I think I can answer some of your questions.
The backlight can go all the way off, to the point where it is invisible in a dark room. You can also adjust the backlight color temperature.
Typing is bad, but I've never spent time optimizing it. I would guess that the responsiveness on the Palma might be higher. I also never tried it in high-speed mode, which is much more responsive but has worse ghosting and generally worse image quality. For my use case (99% just reading) I don't mind the slow response time.
It's possible to access the normal Android settings, though I just picked up my Boox Go and I can't actually figure out how. I know I've done it before somehow. The Boox settings app has a VPN section, but I don't see DNS options. Pretty sure you can do this though.
One thing I want to point out is that the Palma is not technically a phone. It's a wi-fi device, so it will not make calls or send SMS. You would be limited to internet-based messaging apps like Signal or Telegram. I can't speak to how smoothly those run.
There are also a couple proper phones (with SIM cards) with similar display tech coming out this year. See:
https://www.theverge.com/2025/1/6/24335983/tcl-60-xe-nxtpaper-e-ink-specs-ces
https://liliputing.com/the-minimal-phone-is-now-shipping-e-ink-phone-with-a-qwerty-keyboard/