As I said - Yes you can, as long additional range is really empty, AVERAGE() ignores these cells. Empty means, that the additional cells may not filled with Zero neither with empty strings (="") as formulas might return.

The formulas used are Array-formulas. They tend to be slow, therefore it's recommended to keep ranges short for performance issues.

If you do any changes remember you will have to quit the changes by pressing Ctrl+Shift+Enter at one time instead of only Enter. With this Excel will then suround the formula by {} to mark the formula as Array-formula. Only that way the formula will return correct results.

Edit:
As to your second question, it's probably the result of above said