It would work in the way the keyboard was designed, not in the way your computer tells it. So yes, all the keys would perform the function listed on the cap, unless it's some command no longer in use, but that's a different issue entirely
Not at all. In most cases on M's the code sent is the same for a key in the same position. You can tell your OS that your M is a different language or layout and that will change what a key press registers as.
For example, if I tell Windows my QWERTY keyboard is AZERTY layout when I type Q I'll get an A. This is how dvorak is implemented so easily. Tell the OS it's something different, then move keycaps around.
The problem here is if it's a terminal keyboard is not the caps, but the controller. If you had the correct PS/2 cable wired up I don't know if the M2 controller for a terminal keyboard (should be 3) can correctly output a mode compatible with a PC (extended set 2).
As you'd need a USB converter anyway you could soarer it and get it done that way, wouldn't matter, and you can remap keys however you want.
If the auction you're talking about is the 1987 for $99, that's not an M2 but an M. Nice, but it is a terminal keyboard and would need a soarer converter setup. You can find cheaper and find one that's pc native which you can get working with a simple converter.