1. Though YDL was specially built for the ps3, in my opinion Ubuntu is better. Easier to install, free (I think YDL is free now too, but I payed for my copy), and has a bigger community behind it for support, app development, ect. They even have special kernals now to let you access wireless internet. So I think it could hold its own against YDL or even surpass it.
2. You can't access the music on your XMB and in Linux at the same time but you can work around it by putting your music on an external memory storage device (such as external HDD/Flash Memory). You would just have to set banshee to look for music, videos, and pictures on the external device. Also for the file names on your ipod, it always changes it but in banshee, itunes, or other media players, they still show the correct song information.