I have the emergency and the regular frogg toggs poncho's. The emergency one CAN fit over my overnighter bag, which is a Sea to Summit 20L silnylon pack, but i am a smaller sized person (5' 7" and medium build). It won't fit over my golite pack. Yes, i sometimes use a windshirt in conjunction with it, but only if it's cool enough as i overheat somewhat easily. It works well in that situation.
I don't find that it absorbs much water at all. Here's the thing, first it's non woven, 2nd it's made out of polypropylene, which is the most hydrophobic fiber out there that is commonly used for clothing/attire. If it was a stronger fiber, it would be awesome for everything from tents, tarps, and anything rain oriented. But it happens to be one of the weakest synthetic fibers unfortunately. I have wondered if they could put it through a similar process that polyethelene goes through to become dyneema or spectra fiber, but i have no idea if that would change anything and even if it did then it would become prohibitively expensive to use in large amounts like the former are.
Breathability: I don't find that the material itself actually breathes–at least not compared to the regular Frogg Toggs poncho. With the latter, i can draw air through during a suck test fairly easily. I can't draw any air through the emergency poncho that i can remember (i will check and update if i'm wrong about this). However, with a poncho this is not a huge concern as you're getting plenty breathability via that design.
Yes, it's rather fragile. I carry some Tyvek tape with me in case of punctures and the like. I find this tape works very well in a combo of being light weight, great adhesion, and surprisingly strong for the weight.
It's meant as a backup really. It can be used for other than that, but it's not ideal because of the size and fragility. I don't mind using it as my primary since i often use a rather small pack and don't do a lot of "bushwacking".