That's an x58 board so it can have up to 36 PCIe lanes. So you're right both slots should be able to run 2x 16x no problem. The third slot is probably shared or downgrades the second slot but that doesn't matter. Those slots are so close together that you wouldn't be able to use both of them anyway.
The ATI cards are generally as good as the Nvidia cards at gaming and 2-3x better at mining. So swapping the 260 for even a mid-range ATI card is probably a good idea. You can see the details here: https://en.bitcoin.it/wiki/Mining_hardware_comparison
Right now the only thing NVidia is better at is folding and that may change with the next rev of the GPU client.