Yes, if you want to use apps2SD you'll need to repartition the card, which will indeed erase your data.
Let me tell you, it's certainly worth the time it takes to back up your card and copy it back afterward.
That said, I do not think the MoDaCo ROM will automatically partition your card, it'll only use Apps2SD if your card is already partitioned. This is what the partitioning options in the Amon_Ra recovery image are for.
In short:
1) back up your card
2) boot the recovery image and repartition your card ( Use 'Part SD: fat32 + ext2 + swap )
3) use the USB Mass Storage option to mount the new partition on your PC
4) copy in the MoDaCo ROM as 'update.zip'
5) unmount, disable usb storage, and Apply sdcard: update.zip
A few minutes later you'll be swimmin' in ROMmy goodness.
*big scary warning*
Once you've done apps2SD, your card is an integral part of the OS - all of your applications will be stored and run from the SD card. This means that you should not remove the SD card while the phone is powered on and running, weird strange things will happen, and some have reported the need to re-flash MoDaCo after doing so.
I believe you can still use USB mass-storage mode without a problem - I'm about to make a backup and test that now.
[edit]
OK, USB Mass Storage mode works just fine. Hitting the 'Unmount' option in the SD Card & Storage settings works just fine. Undoing that by plugging back into USB and switching to mass-storage and back again works fine.
I do not want to tempt fate by actually removing the card, but I will continue to say 'do not do'.