Ok DoW got to the CC part before I did, so here's my take on the other factors:
1. Yes, per the FAQ, it does not specifically state it cannot be used in CC, as opposed to the Venom Spawn. So he may spit in CC.
2. The Spit is not a Ranged Weapon, it is a Special Ability, which abilities always over-ride the rules, and it does not have a ROF as regular Ranged Weapons do. So since it is a special rule, normal targeting rules do not apply, and it may spit at any one model within 12".
3. Also, since it is a Special Ability, not a ranged attack, and the rules for the spit do not state that he must roll to hit, it is simply the cost of one action. This compensates for the limited range of the spit, and the stats of the Ophidian itself: average at best and an AR of 16 oft makes it a pincushion.
Again, that's just how I see it. For what it's worth.
SP