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I also believe skill points matter as they get you some decent passives and are required to reach the class specializations, unlocking more powerful abilities
Again, I would say yes. I found heavy armor that when upgraded gives me bonus fire damage. As a warrior planning to take the champion specialty class, fire damage increases should help me.
But again, I am only level 17 so there is a long way to go.
The weakest RPG aspects are the dialog options.
Maybe if you don't have anything in that slot but even then I am not sure. Whenever I loot gear I get a comparison screen and can choose to equip the item or not.