Can I use OSB in place of timber as structural element
Yes, it's more stable, but not to "the elements". While it is constructed with exterior-grade adhesive, the nature of thinly-shaved wood means that when exposed to moisture, repeated flex, etc. it tends to break down sooner than high-quality, solid wood. It's certainly more flat and stable than conventional plywood when kept dry. 
OSB is less stiff than solid lumber in a horizontal orientation, but it is roughly as strong. You'll probably be able to carry the same load with an equivalent dimension, but it may sag more. Floor joists are commonly built with OSB vertical members, but the wood strands are oriented vertically. In your case, they'd be horizontal. Therein lies the difference. 
No, though you could run a router or sander over them to reduce abrasion. They'll scuff skin in a hurry. When I use OSB for shelving I run a 1/2" bullnose router down the edges.