No. The only time you would modify your WordPress blog with PHP would be when integrating some of the plugins. In most cases clear instructions are given within a text file that accompanies the plugin. Other than that, you would not be changing any of the PHP files.
Most definitely! There are no known issues with any version of WordPress when PHP is running in Safe Mode.
You certainly need PHP (version 4.1 or newer) to power your WordPress blog. PHP is the scripting language that drives all of WordPress, and without PHP, your server will not be able to interpret the pages that create your weblog.
To get information about your server, you can use the phpinfo() function. This will also give you information about your Apache and PHP version and mod_rewrite.
There are several methods to find out what version of WordPress you are using:
<?php bloginfo('version'); ?>