We have 3 Prii in my family (2004, 2007, 2009, all 2nd gen). All over 100k now, the 2004 has 183k. All on original HV battery, no noticeable degradation in mileage. The 2004 does seem to get a couple of MPG less than the other two, and that may be mileage related.
The Prius has much, much more usable cargo space than any sedan such as the Tesla with the rear seats folded down. I have put 10' lumber in it (with the hatch closed), a full size table saw with table extensions, 500 lbs. of concrete, a lawn mower, compressors, tools... you get the picture.
I can't see any possible health concern with the battery in normal use. You're surrounded by high voltage stuff in daily life, your normal 12v battery has much more potential for acid spillage and the like.
Edit to add: no, you cannot drive a Prius with the HV battery bad. Additionally, you can't even start the car with a bad 12v battery; I have changed this battery on two of our cars.