1) Make a larger one and stick it under your pillow, inside the pillowcase. That's the best option I know of.

2) Nothing in LRM will be inconvenienced by it, and prayer works on a plane high above the etheric plane, where the red bag amulet does its work. If you go on to Circles of Power, and work with the elemental and planetary invocations in that book, you'll want to remove the amulet while doing those.