No, that is not a question.
Do it.
I just did a manual reinstall of my system, yesterday. WinXP -> SP2 from disc -> SP3 via Windows Update -> several Windows updates since then. Before, on the old installation, I installed SP3 to an old, running installation as well. Worked both times like a charm.
The only thing I remember people have to be aware of is that problem of eternal reboots, which some months ago was described to be a problem with some Athlon CPUs, and Windows installations using a HP-version of windows XP. There have been cures described around the net, I think. I do not know what has become of both problems, and never had to be concerned about them.
Find info on it, and if it gives you the impression you are safe from it, I would take the "risk".
Compatability issues with games, software etc, I so far have experienced none, zero, rien, nada.
Keep in mind that SP3 is a security update in the main, most things you will not see. Also, to some degree later windows updates depend on it. If you do not run SP3, you are compromising current and future security of your system, and degrade your options for future maintenance. I had no access to windows updates anymore as long as I had not installed SP3 (it did not list any updates available, they depend on SP3). back then I waited 2 or 3 months, to give them time to cure any possible meltdowns in the code.