Is it safe to reset BIOS?

Resetting the bios shouldn’t have any effect or damage your computer in any way. All it does is reset everything to it’s default. As for your old CPU being frequency locked to what your old one was, it could be settings, or it could also be a CPU which is not (fully) supported by your current bios.

What is setup mode?

Setup mode provides an interactive menu to help you to create an initial configuration file for a new networking device, or a device that you have erased the startup-config file from NVRAM. … Setup mode can also be used to modify an existing configuration.