AO is free to play, and apart from a couple of "small, inexpensive" items -- most stuff from the item mall can be purchased ingame.
I use IM for the blessing and warrior packs, simply to maximise the enjoyment for the time I spend actually playing online. Costs me around USD $25 / mth from memory, although I do buy the 90day warr pack as it is cheaper.
Pretty much 99% of things from the IM can be bought using ingame gold - from the licences through to the mounts, decorations, scrolls, spells etc etc. Of course, these do come from the IM -- just someone else is selling them after having paid for them. Let's just say the "Items" are not necessarily cheap using ingame gold, and you may well be taking a little while to get yourself in a position to buy them on a regular basis, but once again this can be seen as another aspect of the gameplay. For those players that don't want to spend money on IM, this is a great feature.
Suggest you play the game for 1 week, to get the hang of it ... if you don't like it -- find another. At least it won't cost you anything to find out, but make sure you ask LOTS of questions to other players.
Cheers
MM