"I still do not understand why did I need these 3 steps, when Timer 0's int. priority level is 1"

You need to read and understand the section that describes the interrupt architecture in the frequently quoted 'bible' available for download on this very site. Then, think about where the compiler will have palced the IRET instruction in the compiled code.

An analogy:

Thread 1 takes exclusive control of a resource. Thread 1 then blocks waiting for thread 2 to perform some action. Unfortunately thread 2 needs exclusive control of the resource held by thread 1 before it can be scheduled so the result is deadlock.