3. by doing this way my ROM will get upgraded without affecting my root. i.e my mobile will still be rooted (...) should i go for KL7 or KL8..
Ticking the option to inject root in MobileODIN will inject root, yes. As for KL7 or KL8, it's like a week difference or not even between builds, they are most likely almost identical. I for myself couldn't give a preference, I don't even remember how KL7 felt like, it's too long since I flashed it
...you might need to reflash a cfroot kernel via odin mobile once the flash is complete...i had to do this to get CWM back
Not most likely but definitely, the Kernel will get overwritten. Two options: flash the full KL7/8 suite, lose the (custom) Kernel you have and flash a custom Kernel afterwards. Or before hitting "Flash Firmware" select a custom Kernel you already have on your device in the "Kernel" section, this will flash the custom Kernel along with KL7/8. There's 3 main options at this time for custom Kernels: CF-Root, AbyssNote, FM. (Side note, in case interested: I personally use FM, use whatever you like.)
...which you think is better between the two latest firmware posted: KL7 or KL8?
See above. They must be very, very, very similar since one build is almost the same age as the other one. They differ only by a couple days.
KL7 - Non wipe version ( I have updated n not wiped anything, so this is confirmed)
KL8 is wipe version ( I have not confirmed myself)- that will wipe off your setting + Application
I don't remember either if KL7 was wiping or not. KL8 definitely wiped my phone, I flashed it with CWM though, not with MobileODIN (because of the CSC troubles I had with MobileODIN). When flashing with MobileODIN it might not wipe. I don't know, really.
...use titanium backup to backup all application
Or, as I did, since I was on the very similar KL7 before I went to KL8: I did a nandroid backup of my KL7 ROM, updated to KL8, got the device wiped and restored the KL7-data-partition. This way I got the "old" junk back, but this far I didn't experience any troubles doing so. KL7 and KL8 seems to be compatible, as I have guessed before.
... provide the stock rom (...) Kernel : 2.6.35.7-N7000XXKK9-CL725676
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Isn't this a regular XXKK9 ROM which is floating around somewhere here in the forums? Restoring your device to it's current condition should be fairly easy with ODIN. Grab a XXKK9 ROM, grab a XXKK5 radio/modem, flash with ODIN. Done.