Can I use this sign to tell my mom 'I love you'?
No, this sign is only used for things, places, or ideas (like a great book, a delicious meal, or a fun hobby). To tell a person you love them, you should use the standard 'I love you' (ILY) handshape or the traditional hug-like sign for love.
Do I actually have to kiss my hand?
Yes, you should lightly touch your lips to the back of your fist, or at least bring it extremely close to your lips to mimic a kiss. The 'kiss' is the core part of this sign's meaning and expression!
Is this sign formal or informal?
It is generally considered informal and conversational. It's a highly expressive, colloquial ASL idiom used to show strong enthusiasm, similar to saying 'I'm obsessed with this!' or 'I absolutely adore this!' in English.