1. Penance actually puts a card from your hand back to deck before drawing so if you have no deck you will put one card back there and then immediately draw it back to your hand. I can't find any issue with how it works now. Got any more details if you got it to somehow generate endless cards?
2. Yes the gem generation (or actually reverting them back) had some issues (on other levels too). They sometimes indeed were semi-permanent even though they shouldn't. Fixed already for the next patch.