Hi - will I be able to use a wifi only iPad 3 for navigating if I have an external bluetooth GPS device?

Is there any aspect of the software the requires a 3g/4g en route?

Yes, that will work fine. It's the best way to use it to be honest.

As long as you connect to WiFi or tether to your phone before you leave on your trip, SD will be up to date with all the information you need for your flight.

3G connections whilst airborne are flakey and unpredictable so it's not a good idea to rely on them. It's best to leave the default communication options set which means that SD won't try and connect when in flight.

Many thanks - based on that I will sign up!

@stevelup

Why would one want not to be connected in flight? I always turn this option on and when I have 3G connection (sometimes up to 3000' AGL), weather and notam data will be updated. In case I have no connection, nothing happens. Simple as that!
Regards Eric

It isn't quite that simple. If you get a 3G connection and SkyDemon starts trying to use it, but then you lose it, you'll get errors onscreen. This is undesirable really.