yes the interop is available for workflows in O365.
I'm not a big fan of the previous workflow engine, but the new 2013 workflow engine has been incredible in terms of reliability and performance. The down side is that not all activities are represented. However - you can regain a lot of that functionality via REST calls from the Workflow flow it self.
In the case of item level permissions there seems to not be a documented method for breaking inheritance via REST. I have found this however that may be helpful
BreakRoleInheritance is just not documented and can be used using POST request:
copyRoleAssignments – “if true, this method copies the role assignments of the parent securable object when breaking inheritance; otherwise, this method adds the current user to the permission level that is required to manage the list item.”
clearSubscopes – “Indicates whether subscopes should be cleared or not.”
Instead of the Add there is AddRoleAssignment method that also can be called using POST request (NOTE: this method works incorrectly in RTM release of SharePoint 2013!!!! It checks user within current item and if user is not found (usually as we’ve just broken inheritance) throws an exception. In SharePoint Online and March CU it works as expected):
principalid is id of user or group within current site collection. You can get a list of users by executing using GET:
roleDefId is internal id of Role Definition (Read, Contribute, Full Control and so on). You can get a list of available role definitions using GET: