I currently have Mathematica 10.2. If I upgrade to the just released 10.3, will I lose the modifications I've done to keyeventranslations.tr? I'm not sure if Mathematica overwrites these files. What about other changes I've made to the system? For insurance, is there a way to keep my old version of Mathematica with all modifications intact?
I always keep the previous version of Mathematica available when I upgrade. To have two independent version available, I advise checking Preferences -> System -> Create and maintain version specific front end preferences in your current version of Mathematica before you install the upgrade. After doing this, preferences will be maintained separately for each installed version. They are stored in ~/Library/Mathematica/FrontEnd in a _init.m file. You can (and probably will want to) replace the newly created 10.3_init.m file with a copy of your 10.2_init.m to restore your old preferences.
Typically user-edited things in
$UserBaseDirectory will not be changed on upgrade, in general. However, everything in
$InstallationDirectory will be reset to the default state. If you modified that file in
$InstallationDirectory, all modifications will be lost.
Regarding settings in the Options Inspector: If you use version-specific front end settings (Preferences -> System -> Create and maintain version specific front end preferences is checked) then the settings will be lost, or rather: new settings will be created for the new version without touching the old version's settings. Version-specific front end settings are not the default behaviour, so this won't be the case unless you changed it manually. It only makes sense to use this setting if you have multiple versions installed.