It has no lock out chip. The 10NES chip was a Nintendo brand thing only on the original NES. Nintendo actually did away with it on the redesigned NES Toploader due to it's problematic nature.
The FC Mobile II will play PAL region games with no problem BUT the audio sound too fast since the FC Mobile II is a NTSC(North American) console. PAL games and NES consoles ran at a higher frequency than the NTSC ones did. It may play Japanese 60 pin games with a Famicom/NES 72 pin adapter but it will depend on the physical fitment of the adapter into the FC Mobile II. As far as incompatibility with different regions or unlicensed games, there is none.
The FC Mobile II has gotten pretty good overall reviews. Just avoid the first FC Mobile system. That was pretty crappy.
I've read about some complaints on the FC Mobile II. One is the reset button is in a precarious spot and can be accidentally hit while playing if a finger goes a little wild but that seems pretty minor.
Another is that when the batteries start getting low games will start freezing and not play at all but when the AC adapter is used most games will play. Battletoads has a common problem among all clone systems on level 2 so that won't work on the FC Mobile II either, only on an original NES. Some games that may have had their software revised when they were released will exhibit incompatibility but it's not an across the board issue with any particular game as far as I can see. However, Castlevania 3(CV3) seems to come up a lot. For some people CV3 works and others it doesn't. There are supposedly other problem games out there as well.
Other people don't like the fact that the buttons are flat and don't have a concave or convex shape to them.
And lastly, the wireless zapper and external remote controllers that it comes with(to play 2 player or on a CRT TV) are pretty crappy. Everyone seems to agree on that.
Having said all that most people really approve of the system and have said it's the best portable NES to date.
Here's a link of a review in a forum where people talk at length about it: http://www.digitpress.com/forum/showthread.php?t=131873&page=4
Here's a video review on Youtube: http://www.youtube.com/watch?v=P8I1r57auZs