[thelist] Homepage as 404 Error

[live4bacon at optonline.net]

Good day,
over the last 2 months I have been re-designing a company website, today it went live.  I have a couple of questions regarding 404 error pages and 301 redirects.

(Our pages run on an Apache server)

First off about the 404 pages I have read a where a few people recommend using Absolute links (ie htttp://some.where.com) on the 404 pages so as to not send spiders into an endless loop.   But what about Root relative links off the 404 page would these be ok?

Also the boss just wants to serve up the homepage as the 404 error page, I seem to think that the SE spiders (as our current site is indexed) would view this as spam and hurt our rankings, can you all provide me some ammunition to go back to  the boss with on this, or would it be ok to take his advice?

In regards to the 301 redirect using .htaccess.   Can you use wildcards in the 301 line?  (we have moved the site content from /root/dir_site02/ *  to /root/dir_site03/*) 

Thanks for any and all feedback on these matters,
JP