Does swap file changes as needed

Swap doesn't change by itself. But if you want it bigger, you can remove it and make a bigger one. Or add another one.

When ram+swap is full, the linux out-of-memory handler will start killing processes.

As to why, dunno, would have to research, but I bet you're not the first person to think of that idea, so I wouldn't be surprised if it is somehow possible, or there's a reason why not.