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Free will exists at the level of human experience. If we construct a model of the universe to examine the details of interpersonal behaviour of humans, it makes sense to include the assumption of free will into the model. This does not mean we believe that the assumption of free will is a true and accurate reflection of reality. It just means that the assumption of free will is useful for our current purposes.

When we create models of the universe, we do it to achieve certain ends and it is those ends that are important. It is perfectly acceptable to make assumptions known to be false if they make the ends easier to achieve.
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It is very useful to assume humans have free will, irrespective of whether they do or not.

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I think it is useful, but not necessary. It's just as good of a model (if not better, actually), to have physiological & environmental factors determine people's behavior. We can still alter people's behavior by changing their physiology (medication, education) or environment (rehab, prison).

It also helps in realizing the importance that people are raised in healthy environments that promote good behavior. We can't just hope that once a kid grows up and leaves a very bad environment, that their free-will will be able to choose to behave appropriately in society.