2.) I would say it more means that their work was easy to publish in tabloids because it was simple or chic. I am not particularly familiar with the work of Tracey Emin and, though I have seen some Damien Hirst, I couldn’t judge it for this quality, but the phrase itself implies to me that the author is drawing attention to the popular nature of their work, hence, simple and chic. Perhaps more importantly, judging from a Google search of Tracey Emin, may be the controversial quality of the work. In fact, tabloids in America thrive on controversy and often make up outrageous stories just to get readers.
3.) Sort of but not quite. That is tricky sentence and we have to parse it into two separate sentences to make it clear: “In both cases, a brand image was initially built on the tabloid-friendly nature of their work. “Their brand images, along with those of Sarah Lucas and Marcus Harvey, were easily puffed up into sensationalist news.” This should make things slightly clearer. The first clause, on the nature of how the brand images were initially built on the tabloid-friendly nature of their work, only applies to the brand images of Damien Hirst and Tracey Emin. The second clause “was easily puffed up into sensationalist news” refers to the brand images of all four people. I do not know the nature of Sarah Lucas or Marcus Harvey’s works, but the sentence implies (context-depending) that their brand images may *not* have been built on the “tabloid-friendly nature of their work”