IIRC, you should have no problems installing a CFW (be it kmeaw, Rebug or other) since your drive is "half-dead" (it's detected by the system, just doesn't read disks. For those with a real dead drive (or non-existent one) they would need the BDB bypass to update.
After the update you should be able to install .pkg's without issue, same with MM. Backups would depend on which function without a disk in drive (since it wouldn't detect yours), but deank's eboot FIX will make them fake PSN style games which will work diskless.
Again, this is from the top of my head, so I would wait for someone else to either confirm or correct me.