Is it true that the "24p conversion method" referred to in my playback settings within the sequence defaults refers to how any interlaced video I have will be converted into the 24p format?
No, it dictates how 24p material will be displayed on a standard 29.97 playback device, such as a television or monitor that is displaying your Program Monitor output via a 1394 (aka FireWire) device. It's only for external monitoring; it has no effect on internal (that is, in the Program Monitor) playback.
The bottom line is that, unless you're using a connected DV device and monitor, you can ignore this setting.
Thanks fellows, perfectly explained and understood now!