I'm considering using the PwnageTool on my iPod touch to load the 2.0 beta, so I can get it onto my College's 802.1x network. However I am very hesitant, as it seems to irrevocably change something in the firmware. If I hit iPWNR in the app and it loades whatever custom firmware it needs, and then the 2.0 beta ipsw, and say I don't like it, can I simple go into iTunes, do a 1.1.4 restore and have it EXACTLY as it was before (no changes at all the the firmware)?
Yes, you can have it exactly as it was before. The problem is that if the bootloader fails to completely reload (power failure, you unplug it, software glitch, etc), you'll have a paperweight. I wouldn't mess with it right now, and I never encourage the use of pirated software anyway.
Totally reversible. You just restore with Apple's stock firmware and it back to jail. Personally, I think there is absolutely nothing to be afraid of with Pwnage. I haven't had any problems with it (beyond normal JBs at least.) It may be best if you're brand new to the jailbreaking scene to stick with iLiberty or, iJailbreak, but if you can follow directions you will be okay.