Is SATA 2 compatible with SATA 1.
The designers of SATA intended for backwards and forwards compatibility, however, there are some SATA 1 controllers that don't support SATA 2 drives. For this reason, some HD manufacturers added a SATA1/2 mode jumper so that the drives would work with the affected controllers.
See this section of the Wikipedia article for relevant chipset info. From that section, affected chipsets are motherboard host controllers using the VIA and SIS chipsets VT8237, VT8237R, VT6420, VT6421L, SIS760, SIS964 found on the ECS 755-A2 manufactured in 2003.
You should be ok using SATA 1 drives with SATA 2 controllers. (At least, I didn't find any contradictory information).
Yes it is. Sometime you may need to put a jumper on a SATA2 harddrive to make it work on SATA 1 controller but you rarely need it as the harddrive ajust himself according to what is available.