Yes to the first and 'probably not, but don't rule it out' to the second. Install the patch the same way you would install an addon, unzipping to your orbiter directory while preserving file structure. P1 is no great overhaul to Orbiter, but there have been problems with vessels compiled to the June 2010 release. Check to see if any of your addons from that time have been updated. If you have the XR vessels from before August, you will have to reinstall them.
This is only for vessels compiled to version 100606. Vessels compiled against 060929 will still work, as they would still use the VESSEL2 class which has not been changed.