[Balanor]

Important: Along these lines, do not wait to join a faction until late in your PC’s career, as your notoriety can be significantly affected. This is because faction ranks are dependent on overall notoriety and when joining a faction you will not be allowed to join at a rank higher than its initial rank. Therefore, if you switch factions or only join an established faction at high levels, it may result in a significant notoriety loss as your PC will only retain an amount of notoriety that is midway between the initial rank and that required to achieve the second rank of the faction

Question related to this, if I have a character in a temple who gains enough notoriety for the next rank, and doesn't currently but will have enough religious class levels, will their notoriety get adjusted down when they do gain enough levels in the right class?

No! Definitely not! :)
The original section quoted only applies when someone first joins a faction. After that, notoriety will not be reduced when receiving promotions in your faction (and you actually get a notoriety bump every time you get a promotion as well). It doesn't matter how much notoriety you accumulate after you join a faction; it's only when you initially join a faction that the notoriety could be reduced if you have more than what is required to reach the second rank of the faction.