what I am worried about it do I need to remove power/hold reset button when changing the DIP positions?
V->10K resister->pin2 set as input->N/O switch->GND --- resister here is pull up
V->10K resister->pin2 set as input->N/O switch->GND --- resister here is pull upThis is the most common, mostly because the Arduino microcontroller has built-in pullup resistors that can be enabled so you don't even need the external resistor. Make sure "V" in your hookup is 5V and not some arbitrary voltage.
pinMode(10, INPUT); // Or whatever pin...doesn't have to be 10...digitalWrite(10, HIGH); // Pin 10 now has a pullup resistor enabled
What are the drawbacks/dangers to having a low pull down, say 1k? I don't think I can use pull ups 'cause my switches have diodes in front of them...
There is no fundemental advantage/disadvantage of pull-ups Vs pull-down, it's just whatever is easier to interface what your wiring to.
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