Regarding materials, DS just ignores the parts of the .pz2s that it can't use.

It converts things like .objs, but it doesn't save them to where they were, it saves them to a data folder that isn't visible within DS.

edit
that is to say, when you load something, it gets converted if necessary, but you'll never see that.

I can't think of anything that it would do to your runtime if you installed it

It's not the tool used, it's the tool using it