Try it. You don't need to be an ex-googler or Stanford grad to be good at what you do. Be passionate, and convey your expertise and skills or lack of, in the application. Keep on working on your startup, although getting into YC would be helpful it does not come with instant success.
If you want advice or someone to read over your application, I'd love to. My email is in my HN profile.
I'd think so. Most companies that apply have neither a finished product or traction, and the application might just help you clear things up in your head.