Okay, just to let you know... regarding my previous post (#118)
I took a chance and hard-reset the phone. The backup worked. My Lumia 820 went from 3051.40000.somenumbers to 3051.50000.somenumbers. Cyan included.
If you want to use the backup to restore the phone, you MUST log into your MS account during the initial phone setup. You can't do it afterwards, so I recommend temporarily turning off the 2-step verification.
The backup is not ideal. Something returned, something didn't. I lost the layout of the start screen (even though the color scheme and the background picture remained), and also some of the merged contacts (they fell apart into two again). Other than that, pretty good.
As for the apps, they all go away and the phone downloads them again after the installation. Some of them with their settings, some without. If you remove the card before the reset and insert it afterwards, the phone will inform you that it's going to delete the apps on the card before using it. The only thing that stays on the SD card are pictures and probably music.
As for the backup process, it's working now. Just like before, it gets stuck at 96% for some time, but after that it says that the backup was successful.