Help Recording Guitars

[GuitarRiffs]

I use a Zoom H2 to record our band practices.

1) In 2009, my friend was using "MixPad" to add some EQ to this 1 track mix, and it really "fattened" up the sound.
We have started playing again. Can he just use Audacity to accomplish this post-proc on the 1 track recording?

2) Any best practices for this Zoom H2 setup?
We set it on "Low" gain.
To get direct MP3 output, we use "Front"
(and not 2/4 channel which only does huge WAV files)
We position it far away...in the back of the room.

3) Is it worth getting a Yeti mic instead of using the Zoom H2.