1) The inSkin is a piece of paper placed between the outer plastic shell and the inner metal shell of the H3xx casing. A program called H3Tool is useful for creating the printout from which an inskin can be cut, but it's use is not necessary.
2) Various graphical elements (not all) can be changed using H3mod. It is a program that decodes a firmware file, replaces the images with your own, and re-encodes it. This firmware is then checked with the original to ensure it will not harm the music player.
Many people have created skins/themes that can be loaded into H3mod and used.
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