ATO or RUU?

RUU is always a cleaner install than OTA.  The practice of keeping user data and updating by OTA is often a cause for random bugs on any Android device and firmware version.  People just don't like to RUU, because they don't want to have to backup their data (or lose it) and re-setup the phone.

Now doing a factory reset and then OTA, might have the same effect as the RUU.  I'm not sure.  There might be some slight technical difference I'm not aware of.  But I think the result would be very much the same.

You don't need to do a factory reset before RUU.  RUU will format user data automatically, so it would just be an extra unneccesary step.

You need to have the HTC drivers installed on your PC to run the RUU.  There are some standalong driver packages floating around.  But if you want the drivers from the official source (HTC), the easiest way to get them is to install HTC Sync (download right from HTC's website).  HTC Sync also includes software to sync your music and other media.  So when people say not to install it, its usually because they don't like this extra software that they don't use.  Also, you need to make sure Sync isn't actually running (the program itself) when you run the RUU.