I did this w/my 04 and it works fine. You can also upgrade to a combination Bluetooth/Assist module as the 05's+ have if you want to keep assist. I went without assist as I had it for a year and didn't ever use it - thought I'd save myself the monthly fee too.

To answer your questions:
1) I believe the above answers this - which ever you choose. However, if you want both, you'll also need an additional antenna - one for assist, one for the phone cradle (if you go with a cradle).
2)YES
3)My existing mic worked fine

Hope this helps!

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'08 335i Coupe - Barbera Red / Saddle Leather / Light Poplar Wood / 6spd Manual
Options: Sport, Premium, Cold Weather, Comfort Access, Active Steering (awesome!), Power Rear Shade, IPod Adapter, Navigation w/IDrive
Mods: M6 Wheels, Split Armrest, M-Steering Wheel, Euro Light Switch w/Rear Fog Lights, Short Shift Knob w/Matching E-Brake Handle, Clear Reflectors, CDV, Clear Bra

Retired:'04 X5 4.4i