Questions on Carlton's mustache

Ok I got one of those Carlton mustache and was playing with it using "junk scrolls" and ended up with this:
http://puu.sh/9gk7d/98db11147c.jpg

My questions are:
1) Do I hammer the last 2 slots and finish it and then use Upgrade count reset?
Or will Upgrade count reset only apply to the initial 3 slots?
2) It reads that it only effects Upgrade count, so I hope I am correct in thinking it only effect the slots and not the stats. Has anyone used one yet that can confirm that?

I can't answer your 1st question but as for your 2nd the answer is yes I personally tried it and my unhammered +3 mustache had 3 slots with all its bonuses intact after i used upgrade count reset on it