PwnageTool is totally safe. I've used it plenty of times, and it never failed for me.
If you have a Boot Camp partition, you'll want to blacklist it from Spotlight (even though Spotlight doesn't index it). Otherwise you could wait 30+ minutes while PwnageTool looks for your Mac. (I speak from experience.)
Should you somehow mess up, there's always DFU mode.
Running redsn0w is actually quite straightforward. However, there are a few things to know about it.
For 3.1.2/3.1.3, you will need "iPod2,1_3.1.2_7D11_Restore.ipsw". Google for the link.
When asked "Is this a newer (fixed) model?", answer "No" (because it isn't
).
You could leave the options screen as-is. "Install Cydia" is all that you need checked.
Follow the instructions it gives.
Running blackra1n is quicker but "hackier" (iTunes 9.1 unintentionally broke the Windows version, for instance). You just open the app and press the button. On the iPod will be a blackra1n icon, which is used to install Cydia.
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