The strategy of releasing part of a game for free and charging for the full product is tried and true. This frees the game from in app purchases and allows the developer to make money. Sounds like a good, workable solution to me.
That's not really the problem, though. Free demos have been around for ages. The issue is integrating cash payments into the core gameplay. This necessarily undermines the integrity of any game that uses it, unless it's really a game designed around real money like poker or blackjack.