1. On Scalability, are you suggesting ACI not scalable by design?

I would say ACI is scalable by design but you can not control it. It is not possible to scale a specific ACI instance. If you wish more CPU/Memory you need to redeploy that container. Take a look this article https://docs.microsoft.com/en-us/azure/container-instances/container-instances-orchestrator-relationship

1. Is ACI not an option at all for production deployments?

I would say you can use ACI just to do some tasks but if they need more capacity to execute during the short period of time.