Custom Rom installation for defy I have been trying to customize my current ROM in my Defy which runs 2.2 froyo currently as stock. 

I'm confused which how I can customize my ROM, such that my stock ROM is backed up and if I don't like my new ROM I can restore the backup.

Another question is how can I install my new ROM? 

I found couple of videos on Youtube that says installing ROM via 2ndinit after Rooting and then go recovery menu wipe cache, dalvik, etc and then install from SD card. Is this a valid procedure?

Refer to this video.

Is this a valid way of installing?
So late to answer a question like this, still:

For all non-advanced users who want to root their Defy and install custom ROMS, first refer this article.

It says all about you want to know about Defy before torturing it :D But don't worry, it is almost impossible to brick the mighty Defy, so feel free to experiment.