Can these only be used as your character's journal ("and then I went to the Rock Bottom and talked to...") or can they be used as an IC narrative of something that happened to your character in a more formally written style?

I haven't seen any journals in which this happened, and I wasn't sure if there was any kind of taboo about this.

For the most part, best if you use a Journal or Diary system (and if there're spoilers, maybe even keep a real book that you keep your words in ICly!). Certainly, having NPC's in the journal section will make things extremely iffy, because then you can claim that Spencer Twist of the Rock Bottom knows everything you know, and thus should be acting on said information.

I don't have any aversion to Raymond Chandler-inspired works being put in there.

Do whatever you like. If you'd like to use it as a place to stretch your OOC fiction muscles, that's all right. Maybe just mention that at the start though.