Yes but need the isolation as the reset button will short the GPIO if it is high. If it is isolated it will work just fine.
That is a very broad question with thousands of possible answers. As I see it the watchdog protects the CPU if it gets lost in the code. There were a few processors that drove the reset pin low, I believe Motorola was the first with that.
In my systems I have what I call PowerDog. I use a setup called a "PowerDog," which is essentially an advanced watchdog that cycles the system power. It works by powering down all the hardware, forcing a complete reset when the power is restored.
Here's how it works: The processor must respond within a specified time frame by sending acknowledgment pulses. If the processor is up and running, it keeps sending these pulses, preventing a power cycle. However, if the processor fails to respond, the PowerDog cycles the power again until the system comes back online. This signal is AC coupled to force the pin to cycle. The pulses are set high and low in different parts of the code, never in an interrupt.
The line used to pat the watch dog can be read at reset to determine if you are being reset by the dog or a power failure.
I designed this approach many years ago to address issues where internal watchdog timers only reset the processor but fail to reset external hardware.
You could possibly spend maybe the next 100 days looking up watchdog and its variations and not read them all.