Stewart,
The answer to your series of questions is made quite simple if you first clone your existing system drive to an external firewire drive using Carbon Copy Cloner, which you should put on the shelf for safekeeping. Then, you can upgrade your system to FCS2 or do a fresh install of Leopard and FCS2 without any fear.
The standard answer with regard to older projects from all FCS apps, is that they can always be opened in newer versions but once saved they can no longer be openned in older versions of the app.
Its a good idea to keep your cloned drive and older version handy, just in case a client or friend is still working on FCP 5.1 and requires you to do a project using that older version. It has popped-up for me once.
David Roth Weiss
Director/Editor
David Weiss Productions, Inc.
Los Angeles
POST-PRODUCTION WITHOUT THE USUAL INSANITY ™
A forum host of Creative COW’s Apple Final Cut Pro, Business & Marketing, and Indie Film & Documentary forums.