Will this plugin allow me to use Maven 1.x plugins in Maven 2?

No it will not, but it will allow you to package, install and deploy a Maven 1.x plugin using Maven 2.

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What's the difference between one:deploy-maven-one-repository and deploy:deploy-file with repositoryLayout set to legacy?

If you'd use deploy:deploy-file then you'd need to configure the file, groupId, artifactId, version for it, whereas with this plugin you don't need to configure anything but the repository, as it gets the rest from the pom. It's more like deploy:deploy than it is deploy:deploy-file.

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