You'll have to stop questing and won't be able to continue the story past the first half of Khrysalis. You can choose not to use them, but you can't choose not to learn them.
Don't limit yourself so soon. For one thing, the DM spells are invaluable. I was severely crippled before I got over myself and did DM to get Call of Khrulu. It's way fewer pips for almost twice as much damage, and all I have to do is get one shadow pip at some point in the fight. Most of the other shadow magic spells were released wayyyyy too early (not in terms of bugginess or completion, but rather in terms of level-appropriateness and applicability) but I'm holding out on the belief that they will become more practical as the level cap increases. I've trained some shadow spells and played around with it and enjoy the concept, but right now it's just not practical beyond the DM spells. Absolutely, absolutely get your DM spell however. The base shadow pip chance is just high enough to keep me from taking Lulu out of my deck, even when I don't have shadow pip chance-boosting stats.
The current "best" gear from DM and the housing one-shots already have good shadow stats and I imagine KI will continue on this trend of increasingly better shadow stats from high-end gear, so you'll probably find yourself gaining those stats whether you want them or not; might as well use them somehow, right? Shadow magic is sort of optional, I think there are some free spells or spells from quests, I can't remember, but KI seems to be implying that it will be increasingly important as we proceed with the third arc. Obviously the decision is ultimately yours, this is just my personal recommendation.
I imagine it is a matter of ethics. I too am a little disappointed with the emphasis on Death and Shadow magic that KI has taken the game. I understand that kids play much darker games than that which I'm accustomed to and I feel that that is just part of the demographic that they are trying to capture. It seems to get worse with each arc. In the words of Merlin in regard to black magic I'd rather "never touch the stuff." If that is the issue just think that it is like augmented Death magic-which while often associated with evil is not inherently so. I guess my point is, is there isn't really anything you can do about it and you are still a good guy for the time being. Everyone has a bit of good and bad in them.
Well if you want to get past Khrysalis part 1, you have to beat it. Like the others said, you don't have to use them though. I personally don't use them, and rarely when I do it's shadow shrike for PVP. Though I am a fan of Darkmoor spells. They help a lot and are highly used and loved. You need to use shadow pips for that. If you to use the 108 spells from Polaris you will need to use shadow pips for it. Though they are shadow enhanced spells and you have to learn shadow magic to progress through the game and use cool shadow enhanced spells.
Shadow pips and shadow pip chance is fun to use and play the game with
They also had to introduce another way to get pips. I mean we have pip spells that last from 1-10 pip spells and the max number of pip spell you could possibly have is 14! So they created a new Pip "Track" to avoid that problem of what do you do when you have a 14 pip spell and not everyone's powerpip chance is at 100%. I am for the idea of an opposite to Shadow magic namely Light Magic coming about, but I think it will be a little while before that occurs if it does occur. However, like many people say you don't have to use the shadow spells. I agree that the pure-shadow spells are not always useful, I mean some are more than others. The Shadow-Enhanced spells are fairly useful though.
