[Aerich]

To the best of my knowledge, TotL does not add items to the main game (I may be mistaken). However, HoW does.

Installing the expansion should have no effect on your previously saved games. I believe that the the TotL changes (if any) will show up once you enter another area (e.g. see the loading screen), but will not affect the area you originally saved in (until you leave and come back). I haven't seen any indication that TotL changes the original IWD.

The best time to do TotL is after exposing Wylfdene in the HoW expansion. As NobleNick alluded to, there is a further magical encounter in Lonelywood (your HoW base, much like Kuldahar in the original game), that should also occur before you accept the offer of Hobart Stubbletoes in Lonelywood's Inn.

The Jester's Bag of Holding was always in the original game, complete with the chance of getting a dead cat. Any new items you see (typically in shops, or in random weapon drops) were added in by HoW. There are new items (including proper bags of holding) in the TotL expansion itself.