Well from the option you posted
1.you can RGH/Jtag DUAL NAND
( allowing you to run backup via internal hard drive, boot out of xell and into stock xmb for live)
Set back you have to make sure you don't get a 4gb slim.. You won't be able to use Demon its none supported.
2. Use Xkey (I am doing this option)
(Allow you to emulate key once extract and run backup from external hard drive, By pass emulation and run live with)
Set back is price and you can run this on 4gb slim but you need more tool to RGH to boot xell to extract key. I am in the process of doing this)
Common tool to use is NANDx or JrProgrammer, Coolrunner and determining on what slim or if phat again QSB for proper board. You will also need a thrid party card reader and Jtag cable. Usually Jrp has it also does NANDx.
You will need jrunner or jungleflash.