Am I getting in over my head?
No, the game is moddable at various levels of complexity from simple stat changes to making almost entirely new game. Start small have goal oriented tasks that you are working towards and can be completed. It's easy to get frustrated if there aren't any successes to go with the failures.
I have compiled a list of things I need to do and frankly it looks daunting but if people like zombierus5 can pump out mods like crazy it cant be that hard, right? I need to learn:
Hmm... It's not so much that I'm pumping out stuff. I just don't mind sharing what I've done as it may spark an idea with someone else. Most of the mini-mods or other ponderings I've done are to serve my fallen mod and usually get incorporated in some way or another.
I'm not the only experienced person in these forums too. There are actually quite a few experienced developers with ranging experiences from software development to graphics or 3d design, etc. Also quite a few inspiring young people with various backgrounds.
Also, it's important to note I spent six months researching and playing with the 3d modeling side of Sins before I decided to make a mod.
1)What the hell .ENTITY files are and syntax involved?
Reverse engineering some of the mods is the approach I took to start breaking this down. A good text compare utility is a must for this. I of course recommend Eclipse, but there are plenty of others.
2)The horrible world of modeling and come up with inspiration for cool looking space ships(in grinding progress)
3)OMG, what are these UV coordinates and how do people even make good looking textures?
4)How to import models into XSI(I have some old sketchup models I would like to use) and getting them into the game.
Ya, took six months for me. I had never modeled or modded a game before deciding to jump in here after seeing what other people had done.
Read the weebly link Ryat provided, then read it again. Then try it and read it again to see what you did wrong.
5)How to add new things to the game and creating an entity manifest file.
I like tools. Look up Harpo's tools like the manifest maker. The less you hand edit the less headache's you'll have.
6)How to fix problems that will inevitably pop up.
Hmm, troubleshooting and debugging are acquired skills. Sounds like you may have some experience in that regard. I've had to rebuild parts of my mod from scratch re-adding in things until the problem was found.
Am I going to get pissed off and quit five minutes from now?
Possibly. If your not really interested in creating whatever it is, the amount of work may not match up to the payoff.
Will this even be worthwhile?
Only you can decide this one...