Right now their are no good fully working 2.1 ROMs for the MyTouch LE/1.2. Developers are having a heck of a time with the drivers. Rooting can be done, it takes a bit of time. Here is a good how-to.
http://theunlockr.com/2010/03/11/how...ender-mytouch/
To me though it's not worth doing yet. I need a way to go back to the original Fender LE ROM.