First what you are doing is fine. You do not have to update all the time, stay on 3.2 unless you want to run VC and Wiiware from a SDHC card.
A good loader like USB Loader GX or Preloader will prevent system updates.
I play NTSC games on my PAL, again the loader removes the region. As for video you should be able to change settings to take care of this.
I really would recommend a USB HDD, its much easier to use than DVDs.