1) Yes, you were able to back it up without fuss, because as "user" you have read permissions on /etc/apt/sources.list, and write permissions on /media/mmc1. But when you want to restore it after a flash you will need *write* permissions on sources.list, hence root priviledge :-)

2) Nokia's own Application Manager displays a warning that's even scarier every time you try to install or update something. Yet everyone does it, right ? :-)

3) BecomeRoot is the most problem-free package I've ever seen on the 770. The only real danger is not with the tool, but lies in being root, if you muck around in xterm or mc doing things you don't understand. But did you never delete you autoexec.bat or config.sys in the bad old days ? :-)