Other than the hardcopy materials, are there any SYSTEM limitations of LR I would be giving up by getting LR Basic vs LR Deluxe?
No, the Little Reader versions for delux and basic are the exact same application.
That is correct. it is the same LR program and curriculum, and you get physical materials in a Deluxe version ( books, flip cards, etc). You can always get LR Basic and if you decide later, there is an option to upgrade 