Use of "ею" instead of "ей" in instrumental

Question

My grammar book states (as quoted below) that ею is preferred to ей in the instrumental case for educated speech. Is it worth using this form in everyday speech?

Я слежу за нею.

Дракон летит над нею.

и тд

And as a side note, when should (can) I use тобою, моею and all the other similar forms?

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(c) The alternative instrumental form of она́ (е́ю) is preferred to ей in educated speech and is particularly important in passive constructions, avoiding possible confusion with the dative:

Револю́цией перестро́йку мо́жно назва́ть в си́лу радика́льности поста́вленных е́ю це́лей (Izvestiya)
Restructuring can be called a revolution by virtue of the radical nature of the goals set by it

(Ей would imply a dative meaning: 'the goals set for it'.)

(2) The oblique cases of он, она́, оно́, они́ take initial н- when governed by a preposition: от него́ 'from him', к ней 'to her', с ни́ми 'with them' etc. However, some compound prepositions take a third-person pronoun without initial н-. They include:

(i) A number of derivative prepositions governing the dative: благадаря́ им 'thanks to them', ему́ навстре́чу 'to meet him', на зло ей ' to spite her'. Others include вопреки́ 'contrary to', напереко́р 'counter to', подо́бно 'similar to', согла́сно 'in accordance with'.

Answer 1

The rationale behind recommending ею is that ей is easily confused with the dative. Nothing else has this problem, and it's already gone when using the form with a preposition. The dative only governs two prepositions, к and по, and both are exclusive to it. So the ней forms following prepositions are never ambiguous (yes, it's also the prepositional case form, but no prepositions overlap with the instrumental there either), and there's no particular reason to use нею.

Generally, the instrumental in -ю sounds archaic/poetic, and with literally everything except ею, they're not something a person would use nowadays unless they're deliberately trying to come across as either affected or facetious.

(I might just add that none of this applies to the 3rd-declension noun instrumental -ью, where the ю never goes away. That said, it is itself a contraction of the older -ию — мыслию, совестию — which is even more distinctly archaic than the -ою/-ею on 1st declension nouns, adjectives, and pronouns.)

Answer 2

No, it is not preferred for educated speech, the standard form is "ей". "Ею" sounds either uneducated(country-style) or archaic.