MySQL master- master replication

I am in the process of setting up Master - Master replication between 2 servers on a production environment. My settings are as follows,

Existing System:

Server 1:

Status: Master
databases: db1, db2 & db3.
operation: Read & write.

Server 2:

Status: Slave
databases: db4 & db5.
operation: Read & write.

Requirement:

Need to set up master - master replication - db2 depend on db5. so I need to replicate db5 to server 1 and db4 depends on db3 so I need to replicate db1 to server 2.

Proposed System:

Server 1:
Status: Master
database: db1, db2, db3, (db4 & db5).
operations:
db1, db2 & db3: Read & write.
db4 & db5     : Read only.

configuration:

Server_id = 1.
replicate-ignore-db = db1
replicate-ignore-db = db2
replicate-ignore-db = db3


Server 2:
Status: Master
database: db4, db5, (db1, db2 & db3).
operations:
db4 & db5    : Read & write.
db1,db2,db3  : Read only.

configuration:

Server_id = 2.
replicate-ignore-db = db4
replicate-ignore-db = db5

The overall concept is, I use replicate-ignore-db to ignore the databases which are already exist in the system. I have to do this configuration on the production environment. My questions are,

1. Whether the proposed configuration is correct?
2. Can we set up this configuration without downtime?
3. Is there any other variables which I need to consider?
4. What precautions do I need to take before starting this configuration?
5. Is there any other alternative to achieve my requirement?

Thanks in advance.