1. What would happen if he didn't use it on Hardy?
Well , easy , Edge and Jeff would have continued their feud until Edge got injured .
This may seem a little out of the line , but remember when Jeff Hardy was facing CM Punk on SD! , (I think , I don't remember to clearly) Matt Hardy came out and helped Jeff . If CM Punk never cashed it in then it would have been Edge vs Jeff Hardy on SD! and Matt would have helped Jeff .
They could have continued Jeff Hardy and Matt Hardy feuding with whoever , or if someone came out and helped Edge , like Matt helped Jeff , they could of had Jeff and Matt feud with Edge and ... say, Y2J . It could have been a Hardy Boyz reunion . They could have continued feuding until Edge got injured then it could have been Hardy Boyz vs Chris Jericho . (Assuming Chris never turned on Edge , thus , Edge never turning face.)
Or
If Edge didn't tear his achilles tendon , then Edge and Jeff feud could have continued and CM Punk could have waited until Edge got the title from Jeff and cashed it in on him .
2. Would he be the heel he is today if he used it on Edge?
Good Question.
Maybe . Maybe not . Obviously , Jeff could have always won it back from Edge and they could start a three way feud . Then , when Edge got injured , CM Punk could have feuded with Jeff only and that's where he would have gotten the "Jeff , your a druggie , you drink , smoke , ect. ect." Thus , creating the SEC .
But ,
If Jeff left WWE earlier , then Edge and CM Punk would continue their feud and CM Punk would never get his big SEC heel turn .