(1) Despite the FAQ, the rule is badly worded. "You can only make basic attacks, no frills. You can still move normally."
As written, it suffers from a lack of specificity. If it means "the only actions you can take are to move normally and basic attacks (no frills)", then it should say so. Alternatively, "The only attacks you can make are basic attacks, no frills.". As it is, it starts with a statement of ambiguous broadness (is it limiting actions or just attacks?), and follows immediately with a qualifying statement that fails to indicate whether this is an exception or a clarification or example.
Also, there's no guidance as to whether it affects opportunity attacks, interrupts that trigger basic attacks, etc.
(2) Again despite the FAQ, I think it's mechanically and thematically weak.
Mechanically, it's one of the very few effects in the game that has massively different applicability based on the PC's class. Most characters relying on physical attacks do roughly comparable base damage, before riders. Other than this, ranged attackers are largely unaffected by hampered. Melee attackers can be severely limited, but this requires that either they are also stuck and all foes disengage or all enemies are un-melee-able (at which point its an encounter design issue, not a hampered issue). In contrast, the lack of "basic attack" spells means that - with a strict reading of the rules - hampered casters are forced to either not participate until they become un-hampered or use only under-powered weapons based on unfavourable ability scores.
(Yes, the FAQ suggests carrying a secondary weapon. For comparison, imagine that hampered warriors had to use a club while using Charisma for attack and damage).
It's one thing to design the occasional encounter to nullify certain members of the party. It's quite another to have a core mechanic that does so, used by a not insignificant number of standard monsters.
Technically, the same issue comes up with opportunity attacks, except that characters who have poor basic melee attacks usually don't want to be in melee anyway, and usually have a back up plan for getting out of melee. Hampered allows no such option.
Low-level commander abilities (specifically Basic Tactical Strike and Charge (without feat)) have a similar issue, in that they combine poorly with spell-caster attacks.
I suspect the cleanest solution is to provide selected spell-casters with a "basic" attack spell in addition to their normal allotment of spells, with damage calibrated to be at "basic ranged attack" levels. Trying to limit Javelin of Faith, Ray of Frost, or Scorching Ray to "basic attack" levels would be unnecessarily clumsy compared to a simple spell using casting stat / nearby / 1d4 + stat,3d4,... damage (drop stat and add +1d4 damage for wizards). I suggest using d4 rather than d6 because the attack will likely be made vs PD which is usually an easier target.
(Note: I'm mainly writing this from a GM perspective. Hampered is interesting when used against physical attacking PCs. Against magical PCs it's marginally weaker than stun - better in that they can still run away, worse in that it highlights how useless they are while hampered.)
Thematically, "hampered" doesn't really describe the mechanical effects. "Hampered" means "unable to act freely", which puts me in mind of "entangled" or "slowed". But hampered doesn't restrict movement; only non-movement actions. "Befuddled" might be a more evocative term.