Hello,
without knowing your package structure and custom web scripts context file, it is hard to answer all of your questions.
1) Is there issue with the name? – Can't say based on information
2) Is this issue with Alfresco? – Can't say based on information, but would not expect it to be.
3) Are there any reserved words in Alfresco? – None that I know of or have encountered in all the years I am working on Alfresco projects full time.
4) Are there any reserved names for webscript? – None that I know of or have encountered in all the years I am working on Alfresco projects full time.
5) Are there any limitation in names? – You mean length, complexity or creativity / weirdness? Seriously, none that I know of or have encountered in all the years I am working on Alfresco projects full time.
6) Are there any limitation in putting your javaclass to (say) X level down(inside) in package? – None imposed by Alfresco. Based on your operating and / or file system, you may encounter issues with deep packages and / or long package names, but only if you don't distribute classes in JARs (in my opinion, you should never put class files into /WEB-INF/classes - there should be a court for "crimes against the profession" like this).
Regards
Axel