Hi,
Welcome to the community! I was hoping to see people like you pop up as soon as I saw the steam sale

. It expands the playerbase further!
To install the shebang - you firstly need a copy of Bf2 patched up to the (latest) 1.5 patch, which I guess you have if you've just got it off steam. (You don't need to install the x-pacs for Bf2 AFAIK, not even sure they are optional downloads on steam). Then you download the
3 installers from this page:
Project Reality : Realistic Gaming Redefined - Downloads
You'll want the 0.95 client, parts 1 to 3. Be patient, as the downloads are fairly hefty, it is worth keeping them archived on a backup drive somewhere in case you need to format etc... (saves time, and I still have 0.75 on an old HDD somewhere)
After downloading, install the installers in numerical order with administrator rights if on Vista or 7 - 0.9 onwards, the installer should pick up the steam version and install accordingly, since the files are pretty large, I've found on vista and 7 that it takes a while for the admin install question to pop up.
Then, run the desktop PR.exe icon (looks like Dogtags), create a EA online account ingame and you're away! You will have to run PR.exe with admin rights if on 7 and Vista, or all sorts of issues can arise.
Running the game from PR.exe will only let you see servers running PR, but you can play 'nilla BF2 without problems.
Answering your other questions:
Does PR include a graphical update to the 2005 original game?
Theres a lot of custom stuff and improvements on original Bf2 statics and vegetation, so it will look better than vanilla Bf2, bear in mind that it is still a 5-6 year old engine, and the enduring part is the gameplay. However, PR does have its moments - my fave visual wise is Barracuda.
How many people still play BF2 with PR? Enough to find a few games at a normal time?
Lots and lots of people play the mod. The main two timezones are peaktime EU and US (east coast/central peak times seems busier...). Weekday evenings will usually have 2-3 full 64 servers from 6pm onwards, and at weekends it can get quite busy, with up to 7-8 full servers running.
Since you are new, I would obviously reccomend that you learn to walk before flying. Flying (metaphorical and literally in game) can be great fun once you've figured out the nuts and bolts of the game, but in the beginning, take it easy, join a squad and try to get involved, generally I would learn things in the following order:
1. How the gamemodes of AAS and Insurgency work. And basic movement differences.
2. How deviation of bullets when shooting a gun works - this WILL take a while to get used to - search the forums for more info. - Also, how to spot enemy from friendly.
3. How the health system in the game works.
4. How the kit system works, and how to use each kit.
5. How the vehicle system (and thermals) work. Also the anti vehicle kits.
6. How the build system works for firebases - with practical experience on mortars, 50 nests, SPG and TOW emplacement.
7. How AA works (or not - har de har)
8. The sounds that are made by enemy weapons/vehicles.
9. Squadleading stuff - Lazing targets for CAS, placing markers, giving orders in a comprehensible way
GL and HF.