No... putting failsafe/RTH on S1 requires NAZA mode.
And yes, resetting home point is just as it sounds. You can do it while flying, or, I believe, while you're on the ground. It'll set both your current position AND altitude as the new home point (though RTH will still "land", no matter the altitude).
If you want RTH on the switch, go to NAZA mode. Don't let the User Guide scare you... NAZA is not really only for "advanced" pilots... NAZA mode, with both switches in the up position, is exactly like Phantom mode... it just let's you use other modes as well. They just created Phantom mode because, believe it or not, it's tougher than you think to remember to check that the switches are up before takeoff.