1. Yes it will replace them. It is an entirely new created team save. You can either put it on a new gamertag or load directly from a USB rather than your harddrive. I intend to keep two different 32 team leagues going on two different memory sticks.
2. As of 6/10 the editor provides the ability to edit all 32 teams.
3. Nothing else changes other than the individual ratings that you changed. Meaning no ratings, team styles or gold players. In fact if you change any one of these after doing it in the editor then it resets all the changes you made in the editor.