Wouldn't the SP3 have taken care of bringing the computer up to speed into USB 2.0 territory?
Yes, usually SP3 does take care of it. The age of the computer (being from Windows 98 Era) leads me to believe that the ports are USB 1.0, not to mention HP's site says it came with USB 1.0. That's why I said it was just "worth a try". As far as I know, there is no way to confirm whether its USB 1 or 2, other than looking on the manufacturers website like I did. I'm not 100% sure, but the difference between 1 and 2 is due more to an update more than hardware, not entirely sure. 1.0 is a bit before my time.
is it any worse, any more intrusive than whatever goes on on regular Automatic Windows Updates?
I really don't know much about privacy policy regarding windows updates. If you say no then you can't update, you have to say yes to update, so that doesn't leave many options... just the way it is.
It's just like when you install a program and they ask if you agree to the end user agreement, if you say no, it cancels the installation, so you have to agree if you want it to install.