Ornery,
There is a pretty good write-up on the website weldingtipsandtricks.com, search their forum for "multiplaz 3500 evaluation".
Yes, a water plasma is going to have a fair bit of free oxygen in it (even with added alcohol, which is essentially trying to tie up some of the excess O2 into CO2), which apparently yields a lot of oxide slag on the surface of the welds, and probably a lot of depletion of alloying elements in high-alloy and stainless steels. The report says that stainless welds were fairly brittle in comparison to tig welded joints, and they didn't try aluminum as they didn't want to use flux (but I would suspect, even with flux, that the joints would have a fairly high porosity/dross content). I'd be pretty leery of using the torch for copper alloys too, unless welding deoxidized copper.
As a cutting torch, the lack of high gas pressure/flow causes the molten metal to puddle instead of getting blown away from the cut. As a result the torch fails to cut in one pass (the puddle re-welds the kerf behind the torch) on everything but the thinner (<=1/8") mild steel - they tested mild steel, stainless and aluminum.
So, it's interesting if you need something portable (no gas bottles to lug around) for making cuts and welds on non-critical structures, or for emergency welds on equipment in the field (that you intend to get to a more fully equipped shop to re-do the weld).