BD is pin compatible. A bios update is all thats needed for the chip to work in his board. however some power saving features will be lost from what ive read.
Your PSU will handle it, Just that its not exactly a trusted model in book. It will handle a 6950 or GTX 560 Ti easy but a good 650w would be in need if you wanted to Xfire/SLI so you didn't overload that OCZ PSU.
Either direction will work, upgrading or replacing. Depends if you have the money to replace it or not.