Should you... more than likely yes though this may cause a few issues.
- One of the biggest issues is what type of equipment is in the attic? Gas or electric? If gas, how does it vent / where does it pull the air needed for combustion from?
- The second is "if" the AC unit was modeled and designed properly, it was modeled for the type of attic you have now which would mean making that one change would probably guarantee that the unit would now be oversized so it would not pull out the moisture needed during the summer months.
As for the fire concern, per the codes any foam sprayed up there must either meet certain flammability standards or have a retardant sprayed or placed over it.
As for the best foam product,I am a big fan of Closed Cell foam especially from Demilic.Open cell is now allowed by code in our area though I would still recommend a vapor retardant be sprayed on it. Of course it doesn't matter which product you use if it isn't installed properly or thick enough so make sure you get an experienced installer and verify the work.
As for the bedroom issue, there are a few easy fixes for the knee walls (you can always spray them with foam, add foam board over them, dense pack insulation, etc...)
The biggest item comes down to you, what is the best solution based off your needs / wants and your budget? This is one where I generally recommend you find an experienced independent energy auditor to help you sort through your options without bias.
For more information:
Read "A contractor recommended open cell spray foam for the attic of our 27 year old house in Atlanta, GA. What do you think?" a Q&A answered by Michael Holcomb.
Also, read Sean's blog post "Air Sealing: The Hot-Roof Option".