Creating Custom maps?

Hi all

Apologies if this appears to be a stupid question, but OSM is rather daunting when trying to find a place to start.

I have a college project where I am looking to create a visualization of an area from the 1980's.

-I was hoping to use OSM's xml data as my base

-Read this data into an editor (not sure if it will be http://esriosmeditor.codeplex.com/ or http://wiki.openstreetmap.org/wiki/JOSM/Guide)

-Overlay Aerial ordinance survey images and adjust the map

-Export the xml data

-Import into CITY Engine and Generate the visualization.

This is the plan, but I am running into complications.

1. I need to do the visualization on key locations in western europe. So exporting the XML from the site would be too time consuming, I was looking at downloading the global map just once and editing it directly? Advice on the best approach here would be great as it would save me considerable time learning the hard way.

2. Is it possible to overlay reference images in ARCGis or JOSM

3. Assuming i am able to do 1 & 2. I would then hope to export the XML data in 2000m x 2000m blocks. So as to create the visualizations in CityEngine.

Any general tips would be greatly appreciated and again apologies if this all seems a little simple and dumb, finding where to start this project is proving the most difficult aspect at times.