the chances are 50 - 50 you could recover some of the data. It all depends on how far the hard drive has deteriated. Did you not have SMART enabled in the bios?
There will be absolutely no chance of damaging the new hard drive if you set it up correctly.
I would disconnect the old hard drive. Insert new drive and install operating system. Turn machine off and disconnect the optical drives on the second IDE channel. Connect the old hard drive and boot up. Hopefully it will see the old hard drive long enough for you to get the data off.