I believe you only get Red tally on the camera converters. I don't think it does the green.
You don't need the studio converter, but if you're using 3-4 cameras, it would be beneficial for wiring and centralized communication.
To use the camera converters, yes, you need the whole smash. Now granted, if you're doing 1-2 cameras, you can get four camera converters, (one on each end, so two per camera) and have tally.
If you don't need fiber, get the Tally/GPI interface. We got that, as well as a pair of DataVideo Tally light packages, which have the sender and four LED tallies. We just built a custom cable and get all 8 tally lights off our 1M/E.