Can the old Dura Ace Di2 (7970) be upgraded and modified using the current PCE1 that I use on my Ultegra Di2?

No.

So what is needed for 7970? Can it change the button functions like the current tool?

The 7970 system uses a separate diagnostic box called the SM-EC79. You can change switch functions in a limited way with it. It does not have a PC interface, you use blinking lights and switches to change button function. All you can change is which button moves up or down on each shifter. You can't switch front and rear shifters.

http://techdocs.shimano.com/media/techdocs/content/cycle/SI/DA_Di2/SMEC79/SI-7E20A-002-ENG_v1_m56577569830676584.pdf

Is there a firmware update for the original Di2 Dura Ace groupset. If so how do i download it? I am not looking to reconfigure the shifting or anything like that. I was told a firmware update makes it shift a little faster?? I did a search and could not find much.

There is no capability of updating 7970 firmware. That is only available for 6770 and 9070 di2 versions. They use the newer E tube wiring and setup. If you're not happy with the shifting speed of your 7970 di2, then you may as well give up. I've got a bike with 7970 and one with the newer ultegra 6770 with the latest firmware, and apart from the multishift on the 6770, there is no difference in shifting speed that I can discern.

Thanks for the info. I am not unhappy with my current shifting. A tech in a local bike shop said there was a firmware update for my groupset. I did a Google search and could not turn up anything for the 7970 setup. You confirmed this.