So do I NEED Visual Studio of some flavor to do ASP.NET MVC development or could I technically do it all with a simple text editor? If YES, please tell me the catches, like if there is anything special I would have to do besides making the folder structure right and making sure my code is solid, etc.
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You need a compiler, but you could use Notepad as your editor if you really wanted to. However, I would recommend using Visual Studio – it has all the help and support (IntelliSense etc.) you need.
You can download the Visual Studio Express edition for web development for free. The MVC extensions work with this.