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Does the Aspect Host's Rites of Battle special rule that applies BS +1 to all units within the formation allow those units to fire snap shots at BS 2? Is the bonus applied before or after their BS is reduced to 1 for the purpose of snap shots?

See the Multiple Modifiers rule in General Principles for your answer.

Isn't it +1 weapon skill not ballistic skill?

NOo, it is a choice (fixed for all units in the formation, so no mixing of the two)

 Charistoph wrote:
See the Multiple Modifiers rule in General Principles for your answer.

In addition to the above, also see 'Snap Shots' (pg. 33, main rulebook) for instances which would be a set modifier to the model's Ballistic Skill in regards to Snap Shots.

If you've got dire avengers in the aspect Host then they can overwatch at BS2, but that's a special rule they have, it's not from the +1bs aspect host.