For my char, I actually make more money selling herbs than selling potions. I'm focused on getting to level 80 though, so I haven't spent any time getting recipes. I don't have any flasks and only a few transmutations.
As for leveling herbalism and alchemy, it's not that difficult. At one point, I switched to skinning and leatherworking, and then switched to herbalism/inscription. I found it relatively easy to level up herb again. It only gets annoying when you start to reach areas with green mobs, and that is only cos you tend to aggro them easier when you try to herb.
I switched back to alchemy and it took me a week to get to 300. And that was because I was collecting herbs rather than buying them off the AH.
As for the herb healing spell, it's not that great. It's good for leveling classic, but when you get to Outland, it's usability drops a lot when you get 5K+ health. I'm starting Northrend now, and I don't really use it anymore. Only great thing about it is that it doesn't shift you back to caster form for druids.
As for making money, while the potions and flasks sell for cheaper than other professions, you also have to consider than things like enchants are used on a more permanent basis, while flasks are only temporary and should (theoretically) always have a market. Not to mention the extras you get to sell from procs in your mastery.