A good idea, if you want to evolve Drull to level 4, is to wait and upgrade 2 Housings to level 5 (or two level 3 and one level 4 Housings) as it would need 25 Banditos taking up 500 spaces. This means that your Town Hall must be at least level 5.
The cage will be affected by Splash damage.
The champion inside doesn't attack the Eye-ras invading.
The cage can be used as a giant block so long as you don't use it in a long wall. In other words, monsters will path between the cage and ajacent blocks. Putting traps between the cage and the blocks is a good way to use the indestructible feature of the Champion Cage.
The Champion Cage can also act as a defensive building so place it where you have inadequate defenses. Take note that Drull moves very fast and may go outside the range of your defenses to fend off the attacking monsters, leaving it alone and making it easier to be killed.