I have been using 4.0 for awhile and everything is good except for few games that won't play, but i'm generally happy with 4.0.
I have hardware hack Wiikey 2.0 with homebrew and running WADs off my SD. Should I upgrade to 4.1? sound like it's safe to do, just want to check to be sure.
Use Waninokoko's 4.1 installer. That should allow you to use everything you want to do.