Installing Avids are fairly simple, but follow the instructions carefully (there's an Avid instructional video featuring Greg Herbold if you're into video instructions). Minimal tools are needed, a 5 mm allen wrench and a T25 torx wrench, pretty sure Avid still includes a miniature T25 wrench with the brakes but not sure (I use socket style on both the allen and torx so I can use my torque wrench). They should come with appropriate adapters for each rotor size but you might want to look at the content of the kit for the front brake as some are for post mounts, some for IS mounts. I'd replace the cable and housing, especially at 2 years old.
You need to get a hydraulic brake. Get a Formula K17 or a Shimano Deore on the budget end. You'll thank me later. Hydraulic is about seven stages ahead of cable disc brakes.
I did the same swap on my 06 Yukon. Massive improvement. Then I swapped the housing for some Jagwire Ripcords, brakes feel amazing. I don't feel any need to get hydros. Swapping the brakes is really easy too, just unbolt the old adapter from the frame, bolt the new one (brakes are already attached to them) on, swap the cable over, take up cable slack. And yes, they do still include the little torx thingy in the BB7 boxes.
comp - do you think the improved feel with the new housing was due just to it being new, just to it being Ripcord, or both? I'm installing a BB7, and debating on whether to use some "alligator" housing/teflon-coated SS cable or wait for my Ripcord set to arrive.
Just fresh housing will make a difference, but a nice "compression-less" housing will make a bigger difference. I would run full-length housing.
The BB7s are terrific mechanicals, the performance is on par with or better than many entry level discs (Deore, Hayes HFX, etc).
If you get the brakes new, it should come with the proper adapters and rotors. You can use the levers you have now. I would suggest new cables and housing. Grit and grime can get in the housing. More friction is going to result in a poopy feel.
The Park Tools repair section has a nice write-up on setting up the BB7.
I think the fact that it was new housing helped some. However, the fact that the Ripcords don't compress made a definite power difference, more than just the improved feel of new housing.
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