Hey - You can definitely use a capo to make life easier, especially if your guitar is set up with a higher action. And I'd disagree on the 1st fret thing: I see it done, and do it, all the time. It allows you to not give up very much fretboard and still have the action that using a capo allows.
And yes - you can absolutely play Soleá with a capo. Look at Cante por Soleá and you'll see that it's very common for it to be sung up a the 5th fret or higher, so the sound of capo'd Soleá is not uncommon at all. I'd say it's less common to capo that high up for solo guitar, but more common to have a capo than to not have one at all.
Whether it's advisable to practice with a capo is another matter. Some insist that you should always practice without, to get used to the stretches. I generally practice without one, but I don't insist on it. If using a capo inspires you more or allows you play on a guitar with particularly high action I say go for it, though you might also want to get used to playing your guitar without a capo sometimes, or take it to a guitar tech or luthier who can adjust the action for you if that's an option