League of Legends will be embracing the free to play model of gameplay allowing players to play the game free. Similar to Battlefield Heroes and Savage 2, they expect players to go for premium features with 'content customisation' (i.e. Hero appearance and clothing) as their source of income.
It worked for Gaia online I suppose but I'm still not sure if gamers are the sort that would pay for appearance customisation. People who play Gaia Online are playing it for the social aspect and customisation is part of that social aspect. Gamers on the other hand, more choices or an edge and might be more inclined to pay for that edge.
As a gamer myself, I am well aware that forcing gamers to pay for gameplay enhancements introduces an element of potential gameplay imbalance or at least the perception of it. After all if someone else can spend money and instantly level up, what's the point of you playing?
Like many freemium business models, its clear they're trying to get a large customer base and hoping that the small amount of paying customers will be able to support the other 95% of nonpayers.