No your firmware will not be upgraded.
TinyUmbrella only help you save the SHSH blob used when restoring firmware (in the verification process).
The 5.0.1 it stated means that current version is able to save SHSH of 5.0.1.
However, it is now useless because there's still no way to restore/upgrade/downgrade to iOS 5 like what we did in iOS 4.
Meaning to say, SHSH blob trick will not work on iOS 5+ since Apple changed the way of verification.
Hackers are still figuring how to deal with it.

There's no way to go to 5.0 now.
You can only upgrade to 5.0.1.
And there is no untethered jailbreak at the moment.
You'll need to tether boot the device every time it runs out of battery/reboot/crash.
And please make sure your device is OFFICIAL UNLOCKED before upgrade.
If locked set, don't upgrade.

If I'm not mistaken, iPhone from Japan is locked set.

Hmm, iFaith is different from TinyUmbrella.
In short,
- TinyUmbrella helps you save SHSH blobs currently signed by Apple or previously saved by Cydia. If you miss the official signing window, you'll never get the respective SHSH from TinyUmbrella.
- iFaith helps you extract the SHSH blob from your current iOS on your device, even that firmware Apple had stopped signing.
For instance, now Apple only sign for iOS 5.0.1, so for your case you can't get SHSH for 4.3.2 via TinyUmbrella. So your only hope is use iFaith to extract the 4.3.2 SHSH from your device.

The meaning of "for future use" is that if one day your phone have problem and you need a restore, you can restore back to iOS 4.3.2 with the saved SHSH.
Without the SHSH, you can only restore the the latest version which Apple signs at the moment.

Yes, all must be done connected to PC. And the SHSH blobs are by default saved to C:\Users\<Username>\.shsh\ folder.

Yes should be correct.
Just follow the instructions in iClarified carefully.
I had not tried on iFaith personally, cause I saved all my SHSH blobs when they're available.

What is your current baseband version?
Check via Settings>General>About>Modem Firmware

If Respring : no need to do anything, it will respring without problem
If Reboot : Boot tether via redsn0w

Better install Cydia tweaks only when you are accessible to your PC/Mac.

No need any specific law for it as existing law had already covered it.
It is illegal. DevTeam had already mentioned it long ago (that's why they had given up developing it).
And, jailbreak+unlock is legal.

For 1, it's possible if you had the SHSH. But not sure whether the cellular network will have problem or not due to the Baseband/iOS version mismatch (needs confirmation on this).
For 2, not possible. No way to go iOS 5.0 ever again.

Baseband can't be downgrade.
That's why I worry it might have mismatch issue after the downgrade.
(Last time I upgrade my 4.1 to 4.3.3 without updating baseband, then the phone signal will be forever 1 bar. This is what we call firmware/baseband mismatch.)

LOL actually I tried once
Downgrade from 5.0 to 4.3.3, but only for a while (like an hour or so)
I did get the signal, and I think would have no problem gua
Because after a while I re-upgrade back to 5.0 cause need the iCloud sync... hehe

But note that you will get 1013 error after the restore, because iTunes will have a baseband checking procedure... (and obviously your Baseband will not match the one for 4.3.3)
Then you'll need FixRecovery to get pass it...

Oh ya one very important thing to note before you downgrade to 4.3.3...
You can't restore your 5.0 backup to 4.3.3... iTunes will not allow
Hence you'll lose all of your backup settings/SMS/Contacts/Emails/Bookmarks etc...