I don't know anything about it, but I can think of numerous ways to mitigate the issues you mention. E.g.:
* Does it actually matter that the absolute value of temperature sensors is inaccurate, or is it enough that they have good relative accuracy (do they?)
* Do you really need to tell if someone is indoors or outdoors given a large enough sample of users in a given area? That also seems like something you could detect with heuristics (work hours, jumps up/down in temperature).
There's a lot of ways to tease useful signals from noisy data. Is it really the case that smart phone temperature sensors in the aggregate are useless as an input into weather forecasting models?
I can't answer much to your second question but I imagine it's easier in colder environments, especially if the phone is not in a pocket. In addition, here's a publication that claims to be able to get useful signals from noisy data, so I don't know if I would say the measurements are useless [2].
[1] Fig. 10 in https://www.sensirion.com/fileadmin/user_upload/customers/se...
[2] http://onlinelibrary.wiley.com/doi/10.1002/grl.50786/full
Fixed weather stations have corrective mappings associated with them. For example the station at the airport might be assumed to be 1 degree warmer than the generalised temperature for your city. It might be known to collect 5% more rain when the wind is northerly, and 8% less for southerly. These mappings are very important, because they let you shut-down a weather station, and build a new one in a different location, and compare the data from the two.
if the weather stations aren't in consistent locations, with discoverable local behaviors, then converting the raw data into generalised data about the area is going to be very difficult.
What I do know is that whilst teasing signals out of noisy data is achievable when the data are unbiased, the possibility of biases makes it significantly harder, especially when you don't know what the biases might be. This can be a significant problem with all sorts of data that you might think were fairly good, including both in-situ and satellite measurements.
Sadly, until we have a breakthrough in battery technology, all of those will be parallel processors programmed to be asleep as often as they can.