So what exactly do you do if you make law review? I have a feeling it involves just writing about a particular part of the law and stuff. How many people apply for it and how much time do you have to put into law review? Won't it take over your life and 2L grades? If only 10% of the class makes law review, then 90% are without it which means not making law review shouldn't be too bad for employments since the majority will not have it. The 10% can go into big law then.
To answer your questions in order:
You slave away as a Bluebook imbecile, circle jerk yourself silly, and write a comment/note. Many will try, few will win. It takes over parts of your life, but by 2L school has probably consumed you anyways, so it really won't matter. You might be fine w/o out it, really depends. During OCI at my school, people who were on journal got the vast majority of interviews/jerbs.