1. Yes, You will want to install a CFW.
This can be any CFW of your choice (Personal opinion, Habib 4.66)
2. The basic Homebrew apps like MultiMan, PSNinja, Control Fan Utility, PSN Patch.
(You need to run your fan at all times! This prevents the YLOD and hardware failure.)
3. Habib 4.66 is better (again, My Personal opinion) There is very little difference between the 2 CFW's.
4. If you follow this tutorial correctly you will not get banned. Be sure to run PSNinja before going online and spoof your CID with Control Console.
5. The different type of mod menu's are, SPRX menu's, GSC menu's. (An all client menu is a menu that has the option to give mods to all clients., which are in most GSC/SPRX menu's now these days.)
Hope this helped and goodluck on your jailbreak!