It works, It's set on a second layer so you wont be able to cut it off until you reset your SWFs. It's best to level up through battles now, you can level all the way up to the next level and keep going up one level for each enemy you fight when you enable the Gold and XP sometimes, other times it will just give you the regular amount and not fully level you up (at higher levels)
No, nothing can be made permanent on the server side. This means items,coins, stolen items, whatever.