To answer the original question, no, illusions will not alter what you can equip in any way.
Quote:
Originally Posted by newagemystic
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illusions dont change anything about your character aside from appearance and possibly faction standings.
Except for gnome, that makes you a super-hero.
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Not 100% true, but close. Dark Elf Illusion removes your ability to Slam, if you have it naturally (troll->dark elf).
Troll Illusion gives you a very very slight regen (not as good as normal troll regen).
http://wiki.project1999.com/Illusion:_Troll
Dark Elf Illusion gives you ultravision.
Earth Elemental: +10 Strength
Water Elemental: Water Breathing
Air Elemental: Levitate
Fire Elemental: Damage Shield