I also have a Mac Pro 1,1.
I replaced the dual 5160s with 5355s. I replaced the stock ATI video card with an ATI Radeon HD 4870, and have 6 SATA drives running. (2 are in the DVD drive bay)
No power issues.
For the firmware, see http://forum.netkas.org/index.php/topic,1094.0.html (need to sign in to see the downloads) There is a "Mac Pro 2006-2007 Firmware Tool" available that will upgrade the firmware to show the correct processor name and type, and also recognize the Mac Pro as a Mac Pro 2,1.