*Can it get around region blocking?
Nope. For the same reason listed above, you'll still need to use the correct region's ROM for your hardware, and won't be able to play any ROMS of games that haven't been released in your hardware's region. You also can't modify the ROMs without stripping the Nintendo signature and thus making this method no longer work.
*But since the 3DS can't tell the difference between this and a real cart, it means Nintendo can't block it with an update, right?
No. Nintendo can and will block this device. Currently, the 3DS can't tell the difference. However, it's just not being instructed to check the right things. There's plenty Nintendo can do to identify this device. For only one example, they can check the read speed of the cart and see that it isn't the same as an official card.
Worse, since ROMs can't be modified, Nintendo also can and will simply include the update on future game carts, making it impossible to play those games with the device since doing so would force an update that made it no longer function.
*So what will I need in order to use this to full effect?
You'll need:
1) The device itself
2) One MicroSD card to standard SD card adaptor for your computer, or a USB card reader device with a MicroSD card slot.
3) One MicroSD card of every standard 3DS ROM size - 512mb, 1GB, 2GB, and 4GB
4) A method of getting save data off the cart, storing it for later, and putting it back on the cart (an R4i save dongle, for instance)
