"Is it practical or difficult to use in a performance environment,"
Can't answer that question because I don't play live. that's one for Bluzeplayer.
"or should it be used to compliment an existing arranger workstation or is it meant to function as replacement to an arranger?"
I am using my setup at the moment to enhance my arranger, because my arranger has only 1 variation and you cannot load new styles. Eventually I would like it to replace the arranger completely.
"What about the quality of sounds?"
That is totally dependent on the quality of your soundfonts/vst/etc.
"Do external sound fonts need to be purchased in order for the thing to really sound decent?"
There are a lot of free fonts available, but if you want high quality sounds, you would have to pay for them. It all depends on YOUR definition of decent. I haven't found any inexpensive lead voices that I find decent.
"So many questions... and sometime just feel to dumb to ask. I'm also looking for a good starting point."
Ask away, that's what Synthzone is for. I feel really dumb too, but you would be surprised how many other members are benefiting from the answers to those dumb question.
I play Roland EM20 and Yamaha PSR550