The modding possibility can go really far. I think you can reproduce 80% of DCSS out of the box if you want to (except it won't have the same performances). And the engine can be extended (by me) to raise up to 95+% if I add the right layout generator and some more possibility for targeting. Things like Abyss are to complex for now.
The engine is cut in two. You've got an executable and a lot of xml files (xml files weight more than the engine's code). Modding is on XML files only, so there is no code to do.
You are not bound to use hit points, experience or skills, the engine works at a lower level. Creating monsters, removing monsters, applying action (which can be the use of an item, casting a spell, use a special ability) or effects, modifying values.
For example, in 1Quest, the xml add a value "hitPoints", an event that check when hitPoints are modified, and request the removing of the actor if the hitPoints are negative. And their is a power (divine intervention, a priest ability) that override this behavior so the first time you "die", you are healed instead.
The engine only care about modifying values and removing the actor if requested.
The xml add an event so that when the hero die, the game over screen appears
The aim is to be able to create a totally new roguelike if wanted too. I planned to make my next game (a turn based zelda-like, not a roguelike) on the same engine, with npc, quest and rock to push with the gantlet of strength to access the mountain zone.