clarification on rooting

[inferno1]

since i happen to be sick at the moment, along with my son and wife (actually im sick thanks to them ), im sitting on the couch not feeling tired and everyone else is in bed.... so i decided its a good time to start looking into rooting my Droid....
i read the sticky and have a good idea of what needs to be done and just want to make sure i got it right before i go ahead...
so heres how i read it.
my goal is to just root the phone, have a safety backup image, and finally load a custom ROM/Image, probably the one formerly known as Sholes to start tinkering with...

step 1. download the root for droid.zip and rename itupdate.zip and put it on my sd card in the top directory of the Sd card, then follow the magical dance of power off/on while pressing buttons

question 1: is that all thats needed to Root the phone?

step 2:blocking the OTA, (these steps are pretty self explanatory to me)
Question 2: is there any harm in not blocking it? If the OTA happens would it just load the new Image and my phone be rooted again?

step 3 (where i get a little lost) nandroid/recovery image
first, these two concepts are the same thing, correct?
and it is basically and image you keep on the SD incase the custom image you load causes the phone to behave badly and is inoperable, you can just due the magically power dance of buttons and boot the phone to the backup image... is that correct?
if so, where is the tutorial on booting to the nandroid backup?
and is a recovery image (talked about in post two) the same as a nandroid?

thanx for the help guys...
-danny