Ive been advised to get it done as one day your car might not start full stop as the Ignition Starter will pack up..
very doubtful. May depend on different mk's though.
The starter has nothing to do with this part of the ignition switch, at least not in the way you think. They are separate ( in a way), if they were not then mine would not start now (mk3).
no harm in changing it.
on mk2's they regularly go and even when driving you cannot use full beam lights or windscreen wipers and other various things IIRC, there is a very easy bypass though. I did it on one of my friends mk2's a few years ago and its still going strong.