Re: 1.2 can't function independently
Version 1.1 actually eliminated the BuddyPress and WordPress themes. You needed one of each, now it is all in the WordPress theme. This isn’t new to 1.2; 1.2 just comes with a new theme (and the 1.1 theme has been renamed to bp-classic).
As per your last question, if you are on WPMU, you could create a blog and have BuddyPress run on that blog. Your main “site” would run on the main blog.