I don't care for PvP.
Okay, at least this doesn't completely rule out playing on F2P.
My life is stressful enough, I prefer to do PvE and derive my meta-PvP from silently beating others in the meters / rankings.
Sadly, not gonna happen on the F2P. Meters count numbers and cash shop items greatly inflate numbers.
It's pretty much this:
Stats (mainly gear, but also cash shop potions) > Cash shop multipliers to damage/healing values coming directly from stats (runes + patronage) > everything else (including player skill)
Applies mostly to PvP, but don't expect to be beating significantly more "cashed" people on the meters unless you outgear them.
You should know that the game has been stripped of a very large potion of challenging and fun PvE content with 6.0 and 7.0 updates, both on F2P and P2P, but I guess if you haven't seen and experienced it yourself, you have nothing to miss or cry over.
I know I won't be back until they recognize their mistake and revert this atrocity. (Astral changes)
Are there hard limits as to what I can do without a certain amount of cash shop items?
Reverse. There's a hard cash shop limit. If you achieve it, you shouldn't be excluded from any future PvE content.
I won't be able to tell you what is it exactly as I abandoned F2P the very first day P2P appeared (years ago).
Does this game contain upgrade items with a % chance (hate is no word for what I think about such systems)?
It does not, however there are "cursed items" that drop
in addition to regular items. They are useless until uncursed (subtract stats instead of adding). They can be uncursed with scrolls purchasable in the cash shop. Also there's that dreaded "+" sign allowing you to multiply crucial resources by spending cash shop currency - that's nasty. Paying players progress faster.
This rubbish is completely non-existent on the P2P.
However I'm not quite sure how much I want to get into Allods on a competitive level at all. I find that with my limited time I have a very hard time finding guilds / pugs with my skill level that are fine with few hours a week which leads to me abandoning the idea of progressive raiding altogether. I suppose Allods won't be much different.
On F2P time is pretty much directly interchangeable with money, just like in real life. If you hate it about real life, you will hate the game's F2P model. I know I do.
I know I would choose empty P2P over this sickening model any day.