1. You either solder a Mod Chip into the unit OR you could choose the software alternative and softmod your PS2 with a modified Memory Card OR acquire a MagicSwap disc.
2. There's no point in dumping your PS2 BIOS - all BIOS'es are already available online, and provided you have a PS2, you're perfectly entitled to "acquire" one. As far as I know, dumping one requires J-Tagging the unit if it was not modded or dump via USB if you have a method of booting homebrew already.
3. It will remain perfectly functional.

This post has been edited by Foxi4, Sun, October 30th, 2011 at 12:55