1- When I re-gear, why do I need to change the Hypertech settings? What difference does it make or what does it affect?

2- Do I need a lower temp. thermostat first before changing the setting to 185F or can I do it directly without changing any parts?

 

You should change the Hypertech if you re-gear, especially if it's an auto. Most importantly though, you want to re-gear, so that your speedometer and odometer are reading correctly.
You need a lower temp. thermostat before you change the setting. You can change it and the fan will be running, but the thermostat won't be open so the antifreeze won't be moving through the radiator, and you therefore won't be getting any real benefits. That being said, some of the guys that have the autos were talking about lowing the temp on the hypertech to draw more air over the auto tranny cooler. Not sure if anyone has done it, and what their results might be.

 

I have mine set at 180. My unscientific observations are that the tranny appears to operate smoother offroad whereas after the same period of time before the shifts would be harder. More observation is necessary, but there doesn't seem to be any harm in trying.