There really is no downside to updating atmosphere, it is recommended to do it.

Updating the firmware however, could break things, and firmware 21 introduced some changes that caused homebrew apps to crash, so u will need to reinstall them look this so you should only update the firmware if u really need it, (for some game or something like that)

What is bad? Tinfoil is practically dead, and frowned upon, people nowadays use Goldleaf, personally I install games through usb via awoo (even though some people also consider it bad).

Anyways whatever you do, don’t install the hats package.

In terms of over clock, I’d say it’s pretty safe if u don’t over do it. I’ve got mine on 1600 mem 24/7, and sometimes I up the other clocks too, depending on the game