do these:
1. get gingerbreak & install. rooting done.
2. install rom manager from market & use it to install Clockwork manager (app have everything built in, you just need to select mobile). but remember at times it can cause problem like mobile getting stuck at boot. instead use amonra's recovery or TWRP (based on amonra's recovery).
3. download whatever rom you like. but my suggestion is this: CyanogenMod 7.1. get the stable version. & install it. do a wipe of cache, dalvik cache , battery stats before installing.
I did research around a bit and I'm writing down the steps here in nutshell:
1. Root your phone.
2. Go to the Android Market and install ROM Manager.
3. Open ROM Manager and click on Flash ClockworkMod Recovery.
4. LG Optimus One will be displayed. Then allow the Superuser access.
5. ClockworkMod Recovery will be installed. Select Reboot into Recovery. Press the menu key to Reboot your phone. Custom recovery is installed successfully on your phone now.
6. Download the ROM and move it to SD card(no need to unzip the .zip file). Latest stable release of CM7 at the time of writing this post: beta6.5.7
7. Power off your phone now and boot into recovery mode by pressing the Volume Down, Home and Power switch keys.
8. Now select Backup/Restore and then Nandbackup to backup your current ROM to your SD card.
9. Select Wipe Date/Factory Reset and then Wipe cache partition.
10. Select Install zip from SD card and choose the zip file of ROM.
11. Aftrer finishing..Go to advanced and choose ‘Wipe Dalvik Cache’.
12. Reboot and wait for good 15 mins to start off your phone. Finished.
Now some queries:
a) Are my steps correct? I don't want to turn my phone to brick. So just taking extra care.
b) Check the 10th and 11th step. Here first I installed the ROM from the SD card and then Wiped Dalvik cache.. Do I need to wipe the Dalvik cache before installing the ROM or after installing the ROM?
c) How to wipe the battery stats.?
d) Anything else I missed out/you want to say?