I'm not sure one size fits all....
No, that's NOT what the holes are for. (I used to think only motorboat skippers thought that, but I see it all too often on sailboats now, usually newer bigger ones.) In general, if your cleats are properly sized, the line you use shouldn't be able to fit through the hole. It means your line is too small.
Sorry, not true.
Whether the line fits through the hole is a matter of cleat design, not some rule of thumb. There are rules of thumb for line vs. cleat size.
A line fitted through the hole (cow hitch) will move less and thus chafe less. Chafe on the deck and dock are managed through chafing gear. Line should be sized for strength and shock absorption. I have had 2 boats go more than 15 years on dock lines, because I rig the lines to run fair and use quality chafing gear (the gear also lasted 15 years).
Throuble getting it loose? Silly. These are dock lines, not anchor lines. Never had a problem with that in 30 years, but I supose there are exposed slips where it could be a problem, as suggested. But that is only true for a very small portion of boats; assuming they are foolish is ill-informed and foolish.
I have seen lines that were simply looped either during a storm (extreem tides) or if a line broke (the remaining lines see different angles). Given that may eyes are spliced over size, some secondary mean of securing them is needed (if they are spliced the correct size, this is not true, but the chafe argument remains true).
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And this is just a forum and I'm just playin' with you. Merry Christmas!