If you have to ask, then you're not ready. But if you're willing to ask, you soon will be.
1) It's usually a good idea to compile a new kernel for each new version on a server. It's a relatively painless procedure, just be sure to keep your old kernel around and configure it as a back-up in lilo.conf (or your boot loader of choice).
2) Rather than recompile your other software, the best option would be to REMOVE any software that isn't directly related (pronounced 'necessary') to your server. That is, if you're truly security-conscious. Every program on your system is another possible source of exploits, so cut out everything you don't NEED for a server. Run anything else on another computer.
3) Not familiar with Arnos' script, so I can't give an opinion on this.
4) (I know you didn't ask, this is unsolicited advice) Start reading the Apache documentation. It's riveting stuff.