Well it depends on how much your first town means to you. If you want to keep for sentimental purposes(like me), then don't. And if you really want a cycling town, maybe try buying another cartridge.
Yeah go for it! If you already have a main town you want to work and continue on then it sounds okay to turn the first game into a cycling town. After you finish cycling and decide on something else you can just use that town to restart and make a new one, but if you'll regret or so on then probably wait and see xD
that depends on you. cycling towns can be a lot of work, especially if you make a thread took with it. if you're prepared for that, go for it! but if not and if you don't want to plunge your first town into chaos/reset it, keep it.