Should I avoid using it for prolonged periods in medium or even low mode because it is hard on the system/ circuit?
Should I not use 10440s at all if I want it to last a few years (like the ARC AAA it has replaced on my keyring)?
I don't feel any extra heat being generated in low or medium as compared to a NiMH or Lithium batteries on high. I've got about 3 hours of medium run on mine so far and it's performing very well. Medium isn't pushing the battery very hard, so no worries there.
As for the circuit, I don't think there's any way to know for sure if feeding it extra voltage could harm it but I don't see any evidence of that problem occurring is similarly designed lights.