1. You can definately use your current ISP; I\'ve read this in a ton of places. It\'s also how the Dreamcast works.
2. LoD: There\'s a slight mistake in your diagram. You are correct if you\'re talking about either a Cable Modem (which is a misnomer, it\'s actually closer in functionality to a bridge) or DSL, but not a plain old dialup modem. It will still work, if you have something like a Linux box or PC using WinProxy, which is then plugged into your hub. Obviously, this only works if the PS2\'s software supports a proxy, which I\'d be hard pressed to say "no".
3. Hell yes I\'m upgrading! :-)
Rich