software is not portable from one ATVunit to another.
from your description of the 5.0 system behavior behaviour it sounds as if you are not doing the tethered boot stage via USB that is required any time you power on or do a hard reset. The need to do this is the downside of a tethered jailbreak.
Yes it can. If you read the thread I linked you to you would see the steps to boot the device. This is called a tethered boot. It requires the assistance of a computer to help boot the Apple TV.
If you have saved your SHSH Blobs you can downgrade.