By "not played" he means even on the hands he folds preflop and doesn't contribute any money towards the rake he still earns the rakeback. Some sites calculate your rake based on the rake they take from hands you won, while with his deal he could fold every single hand and still earn the 3bb/100 rakeback.

As far as the original question it's hard to give a good answer without any specific numbers for your bankroll. If you're way under-rolled, like $500, I don't think there's any way you sould attempt the 5/10 games until you build yourself up higher. If you're under-rolled more in the ballpark of $2k you would probably be fine since most propping payments are made weekly so you could handle a 200bb downswing your first week.

Another thing to keep in mind is that many of the propping sites require you to play extremely shorthanded, 2-3 players, which will increase your variance even more. I'm not sure if this applies to your case though.