The demo version says it must be installed. I assume this is also true for the full licensed version?
That's right.
I have installation instructions from my host. I currently run a heavily trafficked site. I back the sql db and any replaced files before installing something like this, but I'm always cautious of the risk factor.... so what is the risk factor with installing ioncube and jReviews on my site? Can it get permanently damaged by replacing the php.ini file as is required for ioncube?
No, just add the new line to load the loaders. Request help from your host if you don't feel comfortable doing this.
What does the trial download section mean :"because otherwise your frontend will stop working."?? This sounds kind of serious to me. Why does it make the frontend stop working? If I install ioncube wrong, what happens? Is it recoverable if I uninstall the Jreviews component?
This only applies to the trial version, which I don't recommend anyone install on their production sites and it can happen because all the trial php files are encoded, including frontend files. Since jReviews runs as a mambot, most of your site pages could be affected if ionCube is not loaded properly. The bottom line is don't attempt to install this on your production site for the trial. Install elsewhere and make sure everything works.
In phpinfo you can check if ionCube loaders are active.