What is a RIP, and what do i need to know about it? My limited understanding of it is its a software program that outputs art to a PostScript printer? i think?

Raster Image Processor

It can be hardware of software and is basically an interface for an output imaging device.

There are different kinds, in printing a PostScript RIP is the one you're most likely to run into. It's input is postscript and it's output is raster. It is generally setup for a certain output device or devices, like you have different print drivers for different printers.

At work I have a Postscript level 3 software RIP that runs on a PC. It has two output devices, a AGFA imagesetter and an Epson 7600 proofer. When ripping a file for the AGFA it takes into account it's specifications, the main one would be to create halftone dots. For the Epson it can create regular or halftone dots for press proofs. It can create seperations on the fly or it can recombine seperations for a composite image (like CMYK).

For example I can create a file in Illustrator, say 19 x 25 inches with a couple of shapes on it. This would be say a 50K eps file, when the RIP gets the file it is then rasterized at full output resolution, in the case of the imagesetter 3600dpi, producing a 68,400 by 90,000 dot monochrome image. If the image is CMYK then you can multiply those numbers by 4 to get the total dots or 24 trillion in this case. Each one of those dots is then exposed by a laser onto film, several "pixel" dots make up one halftone dot. The number of "pixel" dots that make up a halftone dot depends on the dpi of the output device and the halftone line screen.

A rip can be a device built into the output device, built into a workstation computer or it can be a stand alone device.
Some rips don't really have any user controls, all options are setup in the print dialog in say Indesign (by PPD), others are half and half and still other are totally setup on the rip (though rare).

The level of a PostScript RIP just indicates which PostScript Language instructions it can understand. Generally most rips are Level 3 unless they are very old. Adobe has a PostScript manual on their site if you want to research the language a little more.