Do people Understand very formal English like in the books? What people may think If i speak like that?

Yes,people do understand very formal English.

the pronoun reference replaces a noun, but you have to make sure there's no room for confusion.

in the first sentence "her" could be referring to shely or to the sister. the answer there is "shelly called her sister and told her about the new baby."

in the second sentence "it" could be referring to the roof or the floor. the answer there is "since the roof leaks on the family room floor, we need to repair the roof."

his tongue, i believe, was bloody and hanging out of his mouth.

he looked as if he were hungry.

he has several wolf-like qualities; a gray coat, sharp claws and yellow fangs.

those eyes made me feel, dear reader, like the end was near.

as i reached for a stick, he moved to the other side of the hill.

panting and hungry, he looked at me, a defenseless human and he snarled.

well i said my prayers, however, he simply turned and limped off.