I rooted my phone the day I got it back in August 09 and have no regrets at all.
The devs who create the ROMs and custom kernals are usually very good at optimising them better than HTC themselves, so yes... chances are high you will see a big improvement in speed and stability. It doesn't even have to be Froyo.
You do have to be prepared to do a lot of reading and try a few different ROMs and set-ups to get the best out of your device though, but the end result will be worth it.
As for what ROM to go for. I've stuck with VillainROM 12 (Android 2.1) since it was released as it does exactly what I need it to and seems to be very stable. With Flykernal 12-pre2 it's is also very fast, although it was fast enough anyway.
I've never really been tempted by any 2.2 ROMs to be honest. I've tried most of them out but not enough to give any recommendations. Give me a 2.2 Sense ROM with Tristan's SenseVillain theme and I'll happily say good bye to VR12 though.
So, my suggestion to you would be (all at your own risk obviously):
Root it, do a Nandroid back-up, find a decent ROM, flash flykernal, download SetCPU from the Market and then just have a play about until you have a nice mix of speed and stability.
For detailed instructions of each step check the FAQs and guides in the Hero Development section
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