1. Let's begin by studying if $(a_n)$ is increasing or decreasing.
Note that $\forall n\in\Bbb N^*$, if $a_n\ne 0$:
$$a_{n+1} - a_n = \dfrac{1}{a_n} - \dfrac{a_n}2 = \dfrac{2-a_n^2}{2a_n}\;\;\;(\star)$$
Thus, we have to see if this is positive or negative. To do this, we need to see if $a_n>0$ or not, and if $2-a_n^2\ge 0$ or not (i.e. what's the position of $a_n$ with respect to $0$ and to $\pm\sqrt{2}$). Since $a_1=2>\sqrt{2}$ and $a_2 = \dfrac32>\sqrt{2}$, we may hope that $\forall n\in\Bbb N^*, a_n\ge \sqrt{2}$. Let's try to prove it by induction:
- $a_1 = 2>\sqrt{2}$
- if we assume that for a given $n\ge 1$, $a_n\ge \sqrt{2}$, then
$$a_{n+1} - \sqrt{2} = \dfrac{1}{a_n} + \dfrac{a_n}2 - \sqrt{2} = \dfrac{2+a_n^2 - 2\sqrt{2}a_n}{2a_n} = \dfrac{(a_n - \sqrt{2})^2}{2a_n}\ge 0$$
since $a_n\ge \sqrt{2}\ge 0$.
- thus $\forall n\in\Bbb N^*,\,a_n\ge \sqrt{2}\;\;(\triangle)$.
Thus, using $(\star)$, we can see that $\forall n\in\Bbb N^*,\,2-a_n^2\le 0$ (since $\forall n\in\Bbb N^*,\,a_n\ge \sqrt{2}$) and $a_n\ge 0$. This shows $a_{n+1}-a_n\le 0$ and $(a_n)$ is non-increasing.
2. Now, we also know that $(a_n)$ is bounded from below by $\sqrt{2}$ and non-increasing. Thus, it's a convergent sequence.