I think readyboost works something like this:
As Ram is expensive, it is not always possible for someone to just go and get more ram, so Microsoft wanted a way to save people money, as they don't sell ram so they don't care.
It works a bit like Linux swap, except Flash memory is more responsive and you can read and write from it quicker than you can a Hard drive. This means that you get more space that is used as ram, and it is more like ram in speed terms. However, some of this speed may be taken away, as all readyboost information has to be encrypted...
About the limited number of read/write cycles:
If you subjected HDs to the same stress, the HDs would suffer the most damage/break first (probably)