Should be simple and straight forward. Head unit comes out very easily, and Metra makes a wiring harness (70-8590 I believe) so you don't have to cut any factory wiring. You will also need an antenna adaptor.
And no, replacing your head unit should have not affect your alarm. Didn't mine (had a 5er wagon a while back).
As for headunits: Nakamichi, Alpine, Kenwood, and Clarion are all pretty good. Nakamichi is a good as it get's; the Kenwood KDCMPV5025 is one of the best deals out there.
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