I've done the internal RAM upgrade on mine as well. Apart from the fact that it makes the machine usable, it preserves the classic, good looking lines of the basic computer which were always ruined by whatever RAM pack you had to plug in, plus it's a lot more stable - no more losing an hour's worth of program entry if the machine gets bumped or flexed. The SRAMs used in these upgrades also consume far less power than the original RAM packs did, so the whole thing can run cooler.
I left mine working through the modulator as I still have a contemporary small monochrome portable TV which works well with it.
I also installed the RAM in a completely reversible way (no track cuts) so the machine can be restored to original configuration at any time. You're right about those keyboard ribbons though. A company in the UK sells newly manufactured key membranes for the ZX81, although I guess your Timex version would ideally need one with a USA layout key legend.