You might find that the time taken relates to the size of the volume to be converted (not limited to the amount used).
Personal estimates of duration may be difficult.
Expect the most reliable estimates to be offered by System Preferences. If the system was only recently started, don't expect an accurate estimate of time; and don't be surprised if the estimate rises occasionally.
For more detail than is given by the progress bar in System Preferences: in Terminal you can run the following command, which will display a tree view of the CoreStorage world:
diskutil coreStorage list
Within the tree you'll see sizes; amounts converted.
If a volume is heavily used during conversion, it might slightly extend the time taken to complete but for your 10 GB used I would not expect there to be any difference. Use the volume as you normally would until conversion completes.
There are no disadvantages to a clean installation. But the return on Lion has been severely culled due to Apple's decision to prevent any kind of modification to the OS. With previous OS X builds, users were able to select (and deselect) packages (such as printer drivers, extended languages, etc.) during the installation process. Lion brings everything and the kitchen sink.
The ability to trim away parts of OS X was probably the most compelling reason to perform a clean install (saving GB of space).
Your notion of how hard drives work isn't accurate. There's no "prime" location for data, outer ring or inner ring. So long as the files are contiguous, your data will be delivered optimally. Access times depend on rotation latency (speed at which the disks spin, calculated in RPM) and seek times (the time it takes the head to reach the desired location to reach the file), although density plays a role too, by packing more bits of data per region (thus increasing throughput).
Moreover, OS X handles the defragementation of small files on a regular basis, ensuring continued performance over time. It's also of note that such things are gone by way of using SSDs.
Lastly, clean installations may also reduce bugs introduced by updates. While OS X is quite resilient, updates can introduce new bugs into the system. Often times, Apple technicians will request a clean installation and applying only the latest subsequent update in an attempt to isolate bugs (rather than upgrade from a previous version of the OS and then applying a slew of incremental updates). These problems are however quite rare.
Best Answer
About 40 minutes or so. I'm assuming a 5400RPM drive, 7200RPM or an SSD would be faster, obviously.