I went to a show a while ago, and the FOH sound guy had one running, with the built in mics + his stereo soundboard mix. I asked him how he liked it, he said it was amazing for the size/price. On the previous tour they had been multitracking everything with the idea of putting out a live album. Sure enough the best show the band played was the one where the multitrack was corrupt, and they went with the recording he had made with the H4n. I can't remember exactly who it was, but it was a national touring act. So that says they can be used to obtain high quality.
My gut feeling is that you can run the internal mics + 1 SBD feed or 1 external mic, but not both. The reason I say this is because (a) if the overhead needs phantom power you don't want to feed that into your board on the other channel, and you probably don't have control over phantom power to individual channels. The other thing is (b) the SBD feed will likely be much hotter than the mic feed, and I think between the "Mic in" versus "Line in" and the amount of gain you need... I think it's just not going to work out as slick as you had hoped. Hopefully I'm wrong.
As far as editing on the H4n... I doubt you will find many people here who advocate for that. Copy it to your computer, use a sound editor, and mix them to taste. I don't know anything about Garageband, but it's probably fine. Audacity is a another decent program that a lot of us use, and it's free.