Victor has answered the Type I/II point comprehensively. The form factor of the card will have no effect on your images. And Type I cards are certainly not being phased out - quite the reverse: manufacturers are introducing increasing capacities in this format since not all cameras (and other devices) accept Type II.
On the card reader issue, hogwash again, I'm afraid. You're no more likely to damage anything by inserting and removing the CF card than you are connecting and removing the USB lead to transfer images directly from the camera. The only issue is if you use Microdrives: if so then get a reader with an eject button rather than the type where you just pull the card out since the microdrive, being a disk drive, is more fragile.