Can I use redeemed money for in game use?
Could I perhaps use the credited money for actual game play? EX: I play modern war and have credit from iTunes, could I use the redeemed money to buy gold in the game?
iPhone 4
Yes, this is called an IAP or in-app purchase. If you have the sufficient amount of money in your account for the purchase you want to make, it doesn't matter if it is from a gift card or otherwise.