Generally speaking it happens when a word is followed by another word to make the expression smoother, so it's common in poetry or in some colloquial expressions. In some cases it's even mandatory ( e.g. Bello becomes bel..) This phenomenon is called TRONCAMENTO and it can cut either the last vowel or the last syllable. As in the rules on when it is possible to do it, there are phonetic rules and I suggest to read this page as a good recap: http://grammatica-italiana.dossier.net/grammatica-italiana-02.htm

1) It is grammatically correct, and is a rule of 'eufonia', i.e. rules related to the 'production of a good sound'. 2) I leave the second part of your question a qualcuno di maggiore capacita` e anche di buon cuore. Too hard for me, sorry! buon cuore = generoso