It has been a long time since I used the handheld, although I still have one. As long as the firmware version is compatible the handheld should work OK. Unfortunately, I don't know what (if any) CPU331 firmware versions are incompatible.
If the program is password protected, you will be granted access to the lowest access level that doesn't have a password. You will need the password to get to a higher access level.
Assuming you get access, you will be able to start and stop the PLC and view the program and hardware configuration. I don't think you can view or clear the fault tables with the handheld. There is no mention of the fault tables in the index of the handheld manual I have (GFK-0402G). All you can do about faults is to look at the %S memory to determine if there are any and whether they are in the CPU fault table or the I/O fault table.
There is also a special key combination you can press during power-up to clear the memory. That would clear everything, but you would then need to enter a new hardware configuration using the handheld. The new configuration would have to be set to load the program and configuration from the EPROM on power-up. Before going to that extreme, I would check the existing hardware configuration to find out the expected power-up behavior.
The shorting pins are to discharge the capacitor that retains RAM memory when the power is off and the battery is dead or removed.