Yea you could do it without take out the engine, but i think it might be easier with it out. The only times i've dealt with taken engines apart they were already out the bay so I dunno how difficult it would be still intact.

Just dropping the oil pan and everything underneath and such and take off the head is all you really need to do i believe.

Yea you need to change the rod bearings too... and head gasket... Im not POSITIVE if you have to but why take the risk..