As to your first question - Drawmack gave a perfectly good answer. In fact you don't even have to redirect your users to another page...
Take for example a community site. If a member was to type in www.something.com/images then the index.html of this directory could display a page for uploading member photos to an online album or maybe thier avatar?
Just an idea. The most common use of this is the www.something.com/forum or /board as bb apps use this as standard for thier forums. (I believe)
And for question 2 - by asking that question you ahve just taken the whole point of PHP and why it was invented in the first place and questioned it's existence!!
PHP is pre-processed. It is server side. Meaning unless a user has access locally or remotely to the server, nobody can see your PHP. If they view sourced all they will get is the output HTML.
for example:
$date = date(l);
echo "Today is ";
echo $date;
When view source'd, the user will only see:
Today is Saturday
So, in short: No. Your user/pass is as safe as your server.
EDIT: I have just realised something else. You can see php source by adding the extension with an s to *.phps so make sure these aren't enabled on your server.