Usually, it will replace the old one (1). However, in most of the cases you can opt for either a "dual boot" (2), or the guest OS boot from the card (3). In the later case your original OS will stay intact. But if you are concerning with your current apps and settings - they will be gone in cases 1 and 2. The Google autosync is not 100% reliable (if you have many apps - they will be autorestoring from the cloud for many days, and still may stuck unfinished) so the manual backup is a must prior to the rooting and after, prior to the ROM upgrade (with the much more thorough root backup utilities).