io_file first

#1
In alpacas 'HowTo: Set up MTW2 for modding' thread, he states that io_file first mods are the only mods that support imo any worthwhile changes to the game (textures, models etc).

He also states that having a mod in io_file first from ruins any other mods that you can play.

so why can i play both BC and SS, both with unique models/textures and both in io_file first?

#2
I have a mod in mod folder style, and gave all european countries reiters. Seeing as the reiters became jellybean men after i did the .modeldb stuff *horror* (transparent and rainbow coloured w/out textures), I changed the config for io_file first and the mod crashes until I change the config back.

Thanks for any replies.