You should install 1.2 over 1.0 as installing it on 1.1 causes the game to crash on startup. If you reinstall, you lose your savegames but there is a way to keep your saves. First go into your saves folder in your MTW2 directory and copy all your savegames and then paste it back once you have updated the fresh install.

If you only have 1.0, then its okay. You won't lose your savegames or will it be affected in any way other than it receiving the patch fixes.

As for the scrolling, I think it is the CTRL & +,- button.or maybe just +,- alone. I used to play RTW without a scrollable mouse so that was how I zoomed. Now I play MTW2 with a scrollable mouse so I never bothered to check the hotkeys for MTW2.