Recommendations for a BD/Video Card

[FordLincolnMercury]

Here is the Plan:

I have already:
OS: Win XP Pro (32bit)
CPU: AMD Athlon 64 X2 4600+ 2.4Ghz
GPU: NVIDIA GeForce 7600 GS - 512MB
RAM: 2GB DDR2 800
MOBO: ASUS M2N-SLI Deluxe AM2 NVIDIA nForce 570 SLI MCP ATX
HDTV: 37" Vizio HDTV

I will buy:
LITE-ON DH-4O1S-08 &
ASUS GeForce 9600 GT 512MB 256-bit GDDR3 PCI Express 2.0 x16

My Questions:

Will this card be backwards compatible with my MOBO which does not support PCIe 2.0? I know it should, but I've read they don't necessarily?

Will the PowerDVD supplied with the LITE-ON drive be sufficient for playing Blu-ray? Or do I need to get the Ultra?

Finally, How bad is the audio going to be if I just take it off my mother board and straight to the analog of my TV?

Thanks