1 - Can he live normally if he maintains his Hb above 7? of course with the usual symptoms of anemia such as the spleen issues and other things.
Living at 7 Hg has its issues as you mentioned. Baseline Hg in Canada is 8.5, below this level triggers blood transfusion. You may try occasional blood transfusion to keep the Hg above 8.5-9. This will help the tiredness, spleen enlargement, mongoloid appearance and other issues.
2 - Does HU loses its efficiency with time, i.e if it works, will it be not boosting Hb after years of usage? and in case it does, i guess it will be too late to consider BMT as it is preferred to do it before the age of 7 right?
Hudroxyurea is relatively new drug, long term issues and efficacy is unknown at this time. The option of BMT will always be present, however, BMT can have certain drawbacks as well. I don't want you to think that BMT is the ultimate cure, you need a matched donor (have you checked for that), GVHD issues, puberty issues, etc are common side effects of BMT.
3 - Our doctor says some Intermedias upgrade themselves to major, if this is true, will it be permanent? i.e will he be needing transfusions constantly and he cannot maintain his Hb above 7? or it will be from time to time?
If the diagnosis of intermedia is done properly including DNA testing, the intermedia will not convert to major.