Can rockets be deflected multiple times

The compression blast range appears to be slightly shorter than the range of your actual flamethrower, from personal experience. You can compression them anywhere within that range and you'll reflect. The angle that it gets reflected back at is dependent on where your cross-hairs are aimed when you hit the compression blast.

Additionally, for grenades, there appears to be some determining factor with return velocity depending on your distance from them. I can't find a lot of info about that though.

Rockets will travel indefinitely until they hit an object. Arrows seem to function similarly to grenades, but less noticeably so due to their natural high speed and lack of "bounce".

In regards to lag compensation, the compression blast is NOT lag compensated. You're going to have a harder time reflecting rockets / grenades / arrows if your lag is higher, especially when dealing with the higher velocity ones like the Direct Hit rockets and arrows.

Edit: As per the link in the comments, edited the above to indicate that the compression blast is NOT lag compensated.

It's hard to say "when" you should compression blast. It's a function of distance and velocity, rather than time from fire. With any projectile, it's nearly impossible to reflect at short range without some sort of luck / godly reaction speed. At longer distances, the Direct Hit and arrows can still be relatively difficult to reflect. Again, it's about the distance, not the time before it hits. The best way to get a feel for it is to play it and learn it intrinsically, not go by a paradigm that there's a hard rule for timing it based on seconds.

You need to have excellent timing and accuracy with reflecting an enemy rocket. You wait for the rocket to get close to you, timing the reflect to aim it at your own feet and jump and crouch, much like a Soldier would. Except it's not your rocket.