Does the effect word life touch cost nothing to cast? does any wordspell cost anything to cast or are they all free?
That's basically how Words of Power work, yes, at least as far as I've been able to understand them.
I've always been intrigued by the system, but no-one in my groups has ever implemented them.
The balancing factor of Words of Power seems to be that while they are free and extremely malleable, you only get a few words here and there, so you need to make them count.
The system also seems to favor spontaneous casters much more than prepared casters, letting them create spells on the fly.