I'm not actually a guru here, but i'll try my best to help.

Yes install amon RA recovery image first.
benefit/updates of using CM 5.0.3 you can see in the changelog in the same link you posted.
Google Addon, you do it just like how you did with the CM, copy to the root directory of your SDCard.
Radio, i didnt install it, my wifis are working fine without it.
Nandroid, i dont think i did it too, was too confused and desperate when i did mine

but its better you do it.
(http://wiki.cyanogenmod.com/index.php/Nandroid_backup - if you need to use the ALT + L step, I tried on mine, you should press and hold POWER button then press UP VOLUME key, we dont have hardware keyboard D: )
back to stock ROM? yes if i'm not mistaken, there's a stock ROM uploaded by one dude somewhere in the xda forum.
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PS: gurus, when i boot into recovery mode, i dont see "Create Nandroid backup" option, i only see the following. (do you guys get this?)
Android system recovery <2e>
Use trackball to highlight; click to select.
reboot system now
apply sdcard:xxxxx.zip
wipe date/factory reset
wipe cache partition
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E: cant open /cache/recovery/command