No it's just a very poorly organized description of the spell combined with a lousy cut and paste.
" If a creature too large to fit into the spell’s area is the subject of the spell, the spell acts as a normal protection from evil spell for that creature only."
Area here refers to the area covered by the spell on a normal casting (in this case a 20 ft diameter circle). What they are saying is that if a creature takes up more than 20 ft of area then the spell only functions as protection from evil and only affects that creature. Though how they are unable to affect the circle if they can't even fit inside it? Well maybe they just are forbidden from moving in any way in that instance.
Also, for material component it says:
Arcane Material Component: A little powdered silver with which you trace a 3-foot diameter circle on the floor (or ground) around the creature to be warded.
And the material component for the Protection from Evil spell says:
Arcane Material Component: A little powdered silver with which you trace a 3-foot-diameter circle on the floor (or ground) around the creature to be warded.
Sloppy editing.
Can they ready an action to attack the spectral hand?
I would say yes. But given that the hand is incorporeal they aren't likely to succeed. Even a magic weapon would have a 50% miss chance. I can't think of anything off the top of my head that comes equipped with ghost touch that you'd actually want to bind.
Plus they would have to know it was there and be expecting it in order to ready against it.
If I were the Malconvoker I'd say to the GM, "I've finished tracing my diagram inside the circle. Now I'll cast Spectral Hand and order it to hide behind me."
"Now I'll cast Magic Circle to create the barrier. and as soon as that's done I'll cast Planar Binding."
While the demon is posturing and attempting to be scary I'll begin casting <insert touch spell>. As soon as it's ready I'll command the spectral hand to pass directly through me and deliver it."