Is it safe to reformat drive during Recovery Mode install? I've inherited an almost brand new 13" Macbook Pro Retina. I'd like wipe the hard drive clean and start with a fresh install of Mountain Lion. I've done this a million times before... but never while booted from the Recovery Partition. So I just thought I'd have someone who has experience with this check my math here. 

Take a look at the following photo of the Mac booted into Recovery mode with Disk Utility running. Can I safely click on the "500.25 GB APPLE SSD S...", go to the Erase tab, wipe it completely clean, and then use it as the target for the install? Will that keep the Recovery Partition intact? 



Seems reasonable to me... but I've been advised against this approach. I've also used Apple's Recovery Disk Assistant to make a bootable USB stick just in case. Is there any reason that I should boot off of and install from that instead?

Bonus Question: When I'm erasing and reformatting disks, I never know if I should click on "500.25 GB APPLE SSD S..." or "Macintosh HD". Thoughts?
The difference between the 500gb and Mac HD is pretty simple actually. The parent is the actual hard drive that holds the partition (Mac HD). You use that to re-partition if you want to split or change the partition table.

So you should use the Mac HD if you just want to erase and install.

The disk1 in your screenshot is the recovery partition. You probably can't erase it or remove it (not sure as I haven't tried). The icon indicates that it is a mounted drive and not an actual hard drive.

So click the Macintosh HD, erase, format, target for install. It's not long ago I did the same on my MacBook Pro.

Happy fresh laptop!