In the release notes, Clem did say to be "cautious" in updating Level 3 packages. Since he did not say to avoid them totally, and that the option for updating has the Level 3 packages enabled by default, there may not be a massive issue.
Sure, an update could break something. That happens with any distro. I have had YaST in openSUSE go belly-up a couple of times after a wonky update borked it. However, quickly enough, there is a fix from upstream and the situation is rectified - usually in a matter of hours.
The only completely safe thing to do is not upgrade anything that is not already on the CD. Not sure if I want to be that cautious, nor do I wish to throw caution to the wind and enable the Level 4 and 5 packages either. I am leaving the Level 3 updates enabled and cruising as normal. I feel that sticking to the mintUpdater is the wisest choice.
As for the wallpaper issue, that was fixed in a batch of Level 3 updates this morning. As with everything, you must weigh your options. Good luck!