I have reviewed several thread on this topic but still not clear on one thing. When using cell phone as modem to connect to internet via bluetooth, does the cell phone need to have wireless internet on it with a monthly wireless ISP subscription?

More or less...

Typically, since the "wireless ISP" is the same company you get voice service from, it's not spoken of. Generally, you'll need a data plan; on an iDEN network, however, data is inherent, and the extra payment just enables the browser on the phone, and is therefore unnecessary.

Short answer yes, you've gotta pay for unlimited "data minutes" from your service provider. The cheapest solution for this is probably Boost Mobile which gives you unlimited minutes/texting/web and data minutes for $45 a month.

Longer answer is no, not neccessarily. I've got an LG chocolate with Verizon and I hacked it using a HowardForum guide to let me use my normal minutes as data minutes without it showing up on the bill. Check out http://www.howardforums.com/ and look for your phone/carrier