Why not? That's what it was there for.

It's air-tight, so it should be water-tight as well.

That I can't argue with. There's actually nothing there that can be hurt by the water; the problem is when the barrel starts to rust and the shell jams more easily.

Deck guns on subs were usually equipped with a tompion (basically a plug which either screwed or clamped to the muzzle of the gun). If you look closely at many pictures of subs with a deck gun, you'll see it in place, often with a lanyard attached to it which is usually spiralled along the barrel to keep it from fouling stuff. Liberal coatings of grease would help too and I assume that other methods to prevent corrosion would also be used. One such method is the use of sacrificial annode plugs - you see these in use on the props of modern submarines where more than one material is used, the plugs giving themselves up to corrosion in order to prevent the important bits from corroding in the salt water.

On the other hand, I could be wrong:

http://www.navweaps.com/Weapons/WNUS_5-25_mk10.htm

That was a good question SteamWake, I had been wondering about that, too.
(and some good replies, as well)

It also seems that the American deck guns could fire many more rounds per minute than the German U-boat guns.

I assume that this was due to a different loading method?

(You'd think those german engineers woulda come up with something similar?)

The 4"/50 was kind a slow at firing. About 7 seconds a round.

The 5"/25 that was designed as an Anti air weapon was much faster at 3 seconds a round.

The other deck gun used on subs the 3"/50. It was a dual purpose gun and could also fire a round every 3 seconds.

The German 88 (3.46") and 105 (4.1") could fire a round every 4 seconds.

One advantage US boats had over the U boats were a dedicated method of delivery. The US boats had ammo scuttles where as the Uboats had to pass em thru the hatch.