It won't sound great, but plugging into the mic input will indeed get the guitar sound into your computer. It will likely sound "dull" (with little or no treble, just like the tone control turned down) due to the relatively low impedance of the mic input. I don't think it could be destroyed by turning up the guitar all the way, but it will probably distort if you do, and it won't be the best sounding distortion. Plugging into the line input may help, but that's not a high-impedance input either. The soundcards that come in computers (either as a separate card, or nowadays built into the motherboard) are really cheap in every meaning of the word, so I wouldn't consider it much of a loss if you did blow out the mic input.
A "Pod" guitar amp simulator will do great (and drive a computer's line input with no problem), though for the tone purist it's still not the same as a "good" model tube amplifier at the right volume. Just to warn you, getting the "right tone" could cost you a couple times what the guitar is worth. I think even a cheap (maybe $20 to $50, as these things go) "buffer" pedal/effects box will work to get the full tone into the line input. You're probably going to want to use a stompbox or two anyways.
Geez, I feel so bad for your friend, pickin' a guitar feels like an important part of my life <you can insert crude jokes here, but I'm serious>. I do a lot more typing than picking, but I think I'd miss the picking a lot more. I feel like I should DO it a lot more.
The guy with the stump playing guitar reminds me of a band I saw 'round Atlanta back in the '80's, the lead singer played bass with a stump for his lower right arm and his band was called, oddly enough, "The Out-A-Hand Band." I was told the guy wrote the last hit song for the Atlanta Rhythm Section.