There are several differences between the 420tvl camera and the 520tvl camera other than resolution. Obviously, there is about a 20% improvement in resolution. That means 20% more detail. While that may not be a very noticeable difference, it is still an improvement. The other factors to consider are the Sony CCD in the 520tvl vs the Sharp CCD in the 420tvl. The Sony CCD performs better at night with the infrared illumination. Also, the 520tvl has a 1/3"CCD instead of the 1/4" CCD in the 420tvl. The 1/3" CCD will maximize the width of view providing around 70 degree view VS 60 degrees.
Upgrading the cameras will not have any negative effect on the system at all. Frame rates, storage ect...are dependent on the capabilities of the DVR and not the cameras.
Attempting to do license plate capture from 120'ft away is very difficult. There are many factors to consider when capturing license plates. Typically there are two cameras used for license plate capture. One camera is an overview camera providing a full view of the vehicle and the other is the capture camera and it's only job is to capture plates. At least 25% of the image in that camera's view should be the license plate. That means to capture a license plate from 120'ft away you should be using a camera with close to a 100mm lens. Keep in mind there are other factors to consider like lighting and traffic control as well. I would recommend you first try this camera http://www.securitycameraking.com/600tvl-dual-power-wide-dynamic-58324-prd1.html with an outdoor housing and a 5-100mm lens. Also, you may wish to read this article on our website: http://www.securitycameraking.com/securityinfo/2009/08/license-plate-capture-basics/