I have a 2.5 year old and a 10 month old, girls and I was pretty nervous about the transition with the new baby. I got a few books about being a big sister and about having a new baby, and read them to her. She was only about 18-20 months old when we started this (about 2-3 months before the baby came) and I wondered if she would understand. It seemed like she did - especially as the delivery date drew near. She was 22 months when her sister was born. We talked about it with her and she seemed really excited, and very interested in babies.
As for the c-section, I had two c-sections and I really liked that I knew the date and how to have coverage for my daughter when I was in the hospital. At her age, she really wasn't too freaked about it or anything. We happened to have a huge snowstorm that day & week so she couldn't visit as initially planned and that was a little hard on her as she got quite needy when I got home. Speaking of which, she was VERY clingy needy for about 3-4 months after that.
As for the recovery, you will find that recovery is MUCH better with a planned c-section. I really found that to be true, as did many of my friends in the same position. It is still hard though, and I thought the hardest part was that for several weeks I was unable to lift my daughter and that meant not being able to put her down, since I couldn't lift her in and out of the crib. And it also meant not really being alone with her for awhile, and I missed having 1-1 time with her. Also, with the not lifting thing - there are creative things you can do. For awhile, I thought I couldn't even get her into her booster chair at the table, but then I put another chair next to it and she was able to climb on that and then we could get her into the chair without lifting. Look for things like that!
In a lot of ways, this transition will go smoother than you will think. It is amazing how the kids adjust. Hang in there, it will be really fun once you see them start to make each other laugh!!!