It will work with Windows XP and ME (possibl not earlier versions) but you
will get an idiot box about how the connection could work faster and will
offer to look for a USB2 port which you do not have. Just x out of the box.
The difference in transmission speeds, among other factors, is astronomical
between USB 1 and 2 and it is well worth getting an add-in USB 2 card (if
not replacing the entire motherboard!).

Correct.

Yes, its backwards compatible but it will be slow. Trying to download 20
RAW files will take forever.

It will be an addition to if your USB1 is built into your motherboard
where it can't be removed. If you have a PCI card then you can remove it
or just keep it. If you have a PCI USB1 card, I would just replace it
with the USB2 card. No need in wasting space since you could use it for
older USB too. You could use the slot for something else in the future.

Yes, it will work at 6/12Mbps.  USB2.0 is 240Mbps.  It is a no-brainer
for the $10-20 cost unless you are just uncomfortable working inside
a computer or lack an empty slot.

All that I've seen are in addition to your existing USB ports.  BTW,
most cards come with drivers and will work with Win98, WinME,
Win2000, and WinXP.  I think you can even get 'em to work with
Win95.