it seems to be personal preference. some people say its easier to remove the resistor, some say cut the trace. I have personally cut the trace each time using a fresh razor blade / box cutter but that doesn't mean its the best way. both will accomplish the same task. some say removing the resistor allows you to reattach it if the need be to undo the mod, but i haven't heard of anyone ever undoing the digi-mod or needing to for that matter.
you can still record to PC, but you can no longer play music from your PC through the UA-5. once you are done you should have some sort of device on hand that can accept a digital signal aside from a PC to test out that the mod worked. i also recommend having someone else present when you do the mod to help hold that little jumper wire in place while you solder.