If two users share a UID, which entry in /etc/passwd is used to find home directory and login shell?

Well during login, the login name is available, so this is used for the lookup in /etc/passwd to find the login environment. However, I just did the experiment for the relevant portion (the output of top and ps, and indeed, the login name is not preserved. You get the first login name which matches the numerical user id, so for the original problem I agree: That's a bad idea.