Lots of us do this. If you're using an ORM then it makes sense to do it to keep unit test time down. We do it but have a full integration suite against the primary engine (SQL Server). Not had one discrepancy.

Your CI server should be running a stack very similar to production, but there are excellent reasons to use SQLite/H2/etc. in dev.

Being able to do a "git clone foo; cd foo; do my job" is a great way to start working, especially if you have struggled with front-end stylists using real data and back-end services, or any other specialised, possibly short-term, experts who are working on your project and don't have a need to learn basic db admin skills.

Never mind if you use RAC in production - you're going to make some concessions in your dev environment.

You only test on developer workstations before pushing to production? Sounds like a disaster waiting to happen, if it hasn't already.