Imperial Edition Upgrade really has nothing to do with the Imperial City. It gets you the ability to create characters of that race, and is a requirement for buying a couple of the houses. I think there's a horse included, too, but since everyone gets a horse as a level-up reward, that's essentially a cosmetic item.
Any character can PvP in Cyrodiil and the IC, but none actually need to do so. You can get all the skills from doing Battlegrounds. Yes, that's a kind of PvP, but it's much more a team sport than anything else, and you can get Caltrops, Vigor, etc. from just playing on the losing team a few times.