[BG]

1st.... Yes it is safe to install a mod chip in you PS2 (Providing whoever installs it knows what they are doing and doesn't screw it up)
There are many users on this forum that are playing "ONLINE" as we speak.

Excuse my lack of ps2 hardware knowledge but are my fears unfounded?

In my opinion, your fears are unfounded at this time... Maybe later down the road, they may come up with something to detect mod chips while your playing online (I doubt it) but then the chip makers will come up with a way to bypass it...

2. Is it possible to turn the modchip OFF when playing online or playing an original game? And turn it back ON to play burnt copies?

Most INTERNAL mod chips operate transparently anyway. Meaning if you put in a original game, it boots just like a original. If you put in a copied game, then you have to use the "specified boot procedure" for your paticular mod chip in order for it to work and play the copied game...

3 Of course, for a new PS2, what would be the best mod chip?

More than likely if you go and purchase a new PS2 now, you will be getting a V7...
If thats the case, you could get, the Apple, Magic 2, (or if your patient) the NEW Messiah 2...

4. I understand that mod chip will let me play games that i burn on CD-Rs (using Nero). Also, games bought from outside the US (original). Am i correct?

Most mod chips will boot import originals... As far as burning cd-r's. Yes the mod chip will let you play cd-r copies of games (Although I would suggest burning from a original game using Clone CD instead or NERO)

NOW: For my 2 cents worth.... You will find that the mod chips that I have rec to you are more expensive than other chips... If you do the research, you will find that they are worth EVERY LAST PENNY....