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What does this do over the standard MOS SDK?
It is the standard SDK with exactly the same files and no additional features. There is a tiny difference in the sense that Cubic's installation of the SDK does not use softlinks (it needs a bit more space on disk).
The advantage over the original SDK installation comes from other aspects: upgrades integrated, more compilers, more targets, more SDKs, integration with Cubic's system of compiler activation.
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Can this be used in place of it?
If you want to use Cubic IDE, you have to use it, there is no way to use existing compiler and SDK installations outside the "devkits:" path.
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If I install it will it work if I havent ever installed the MOS SDK?
If you have an installed SDK elsewhere, it will be ignored and you will be asked to take its lines out of user-startup. If that SDK contains a customized "gg:" which you want to continue to use, copy it over the Cubic-installed SDK and hope for the best.
Note however that only "gg:usr/" and "devkits:compilers/gcc/morphos/user/" survive C/C++ upgrades: You must put all customizations into these folders or the next upgrade will delete them.