For your connection, you could also find some type of cap to put over the end of it too, even if you did mount it behind a fold down license plate. Never hurts to have a little extra protection.

You shouldn't really see any negative issues with air tools and 1/4" line with your setup. Like I said you could use 3/8" line also, but my only concern would be a slight drop in pressure due to a somewhat lack of volume. Most likely it wouldn't be that big of a deal though.