Is it true that all fats will die at some point?
Yes, it's pretty much a matter of time, but it should be pointed out that slims are probably not any better in this respect though. They use the same crappy lead-free solder under the CPU and GPU. A tech that fixes these for a living told me that he thinks the slims run hotter anyhow; after all they're just similar parts crammed into a smaller space. It is more common to see fat models get the YLOD now, but that's just because they're older so they tend to die first.
Does a leaded solder reballed gpu on a fat mean it is fixed long term?
If it's done properly, yes. A reflow just delays the problem, but a lot of places do this instead of a full reball because it's easier. It's getting harder to find reputable places that will reball with leaded solder, but if you can it's worth it.
I have a 27" crt I can play ps2 on so should I go for a slim and forget ps2 compatability?
I would forget about the PS3's PS2 and PS1 compatibility either way. It's based on emulation and has some lag. Anyhow, yes your PS1 and 2 games will look better on a PS2 on a standard definition CRT than on a PS3 on a flat panel. (The PS2's backwards compatibility is fine, as it uses some hardware; it works great for the vast majority of games, and I don't think it adds any lag).
The older fat models do have the benefit of 4 USB ports though; later ones only have 2.
Will all ps3 models output to my 480 crts via component?
There aren't any resolutions available via HDMI that aren't available via component on the fat models I have. I'm pretty sure the same is true on all models.
I already have a region free x360, any good reason to hook a ps3 up to my horizontal or tate cab?
There are plenty of great fighting games and 2d platformers for PS3, but the only exclusive I know of is Blazblue: Chrono Phantasma (coming out next year), and that one really needs a display that can do 720p anyhow. I can't think of any vertical games for PS3 at all, 360 has all the shmups.
I found a guy willing to sell a downgraded slim foe $160 with a controller, sound like a decent deal? Same guy has reballed 4 usb port fat for $140.
I'd recommend the fat. Is that a one-time thing, or is he selling these regularly? I might be interested.