1) IF you have enough deductions to bother itemizing, then you may or may not end up with income on the hobby. Read through the example on page 6 of Publication 535. Any allocable otherwise-itemized deductions (home mortgage interest, property taxes) are used first, and then the rest count as miscellaneous deductions and are reduced by the 2%-of-AGI threshold. So, if you would be itemizing and taking those home items anyway, the net effect on your return is an increase in tax. If you did not have enough miscellaneous deductions to already cover that 2% threshold, that would mean an increase in tax. Most likely, I would guess that you will see some increase in tax for this.
2) If you end up with hobby income, I don't think that you can open a 401(k) for it. Not "it doesn't make sense," but "is not permitted." I'm not completely certain, but I don't think that you can elect to classify hobby income as (self) employment income, which is required for retirement contributions. Just like you can't take dividends from your taxable account and call them income for IRA contribution purposes, I don't think you can call hobby proceeds income for 401(k) purposes.
IF you turn this hobby into a business and treat it like a proper business, then you can start reporting income and expenses on a Schedule C, pay self-employment taxes on it, take full amounts of the expenses without worries about itemizing and 2% miscellaneous thresholds, and put that income into a 401(k).
I'm writing this late at night, so pardon any typos. Other CPAs should feel free to jump in if I have botched anything. I haven't worked with much hobby stuff on tax returns.