I've worked in a company similar to this in structure albeit much smaller.
Here's a few things I'd like to point out.
While we were all "equals" in regards to making choices where consensus wins generally speaking the longer you were with the company and the more you accomplished the more likely people would listen. That said in the event a consensus wasn't possible we had one of the company's founders who was incredibly intelligent would act as the tie breaker / final word. Everyone respected him so in the one or two times it came to this everyone accepted it.
Just the same if you were "the new guy/gal" your opinion counted, but you really didn't have much leverage to work with in the event there was a disagreement. (again this was a very rare issue)
Hiring by consensus
The hiring process did involve everyone and anyone could effectively remove someone from consideration, think of it like this a candidate comes through, if no one decides not to hire them then they get the job, but if anyone says no, they aren't.
The process didn't involve everyone at once though. We had some people who had run companies in the past who had lots of hiring experience, generally they culled most of the candidates without involving anyone else. As candidates survived their scrutiny the immediate team that person would work with would be brought in, same deal if you made it past them you were introduced to the company and as long as no one spoke out against you then you got the job. I would say 90% of candidates never got past the first round, most of the rest got axed second round, only one candidate was ever axed at the last round. (by someone who had worked with the guy in the past) I work in a traditional company now and I would actually say the number of candidates rejected vs accepted is fairly close to the same. I find traditional though is better at hiring really good, or really bad people, where as the consensus method we used was very reliable at getting good, but not necessarily great people.
Firing actually went pretty smoothly for us. We were in a write to work state so firing some one was a fairly simple process legally speaking.
We had two general types of firing immediate and consensus. Basically if someone was doing something severe enough immediate on the spot termination was in the best interest of the company it was done on the spot and then that person would explain things after the fact. (Typically this always happened where a trusted person fired a relatively unknown person)
consensus was usually for stuff like where a person's performance slipped to a point of unacceptable, usually by that point with our company size there were already a number of people both aware, and pissed off about it. Generally though teams self enforced. If you weren't pulling your weight, your team would try and help until they got tired of it, then you were gone. (usually the person with the most experience actually would facilitate the termination)
Raises and salary
I'll admit my knowledge here was limited in regards to the rate a person was hired at. At some point they determined what an acceptable salary was for a position (range) and any new employee would be hired at that rate, generally the experienced managers would negotiate things with the candidate and their judgment was respected.
Raises were pretty even across the board. on a pretty normal year the raises would be about 5%, the highest we ever got was a 12% raise when we had a rockstar year, we actually took a pay cut one year to float the recession in the early 2000s (basically it was we had to reduce pay, or cut jobs, we all treated each other like family, so we were prepared to "take one for the team" to help each other out.) Generally though we got much better raises than you would a normal company as our staff members who'd been with the company the longest were making only 20-30% more than most of the staff, which felt entirely fair especially when you consider what the average CEO makes compared to their staff. (If we had a one time thing that brought in more money we typically just gave a bonus out)
Cliques, gang mentality, revenge mentality
While these are legitimate concerns and frankly would probably be nearly impossible to prevent in a large company, ours was only a medium company. Our hiring process also helped a great deal in preventing favoritism and bias from becoming too much of a problem. That and if you ever did something against company interest you could expect to piss off everyone and be fired promptly. (Keep in mind not agreeing with everyone is fine, we actually had people who regularly got into heated political debates. You were only in danger when you were fighting for something that was obviously for personal interests vs what's good for everyone)
Company loyalty was pretty extreme in that company. We treated each other like extended family. If something was causing grief for one of us, it was causing grief for all of us and we'd try to rectify it as fairly as possible, this mentality was held by most which prevent self centered people from really being able to manipulate things to their personal advantage.
So this company was awesome, everything sounds like a dream, so why the past tense? Well all that I covered was well and good, and I still saw the company like old family. unfortunately there are some things this model struggles with. For us the thing that shattered this dream was hiring up the food chain. While we were all good at our respective jobs to be successful long term you need someone with entrepreneurial qualities, the person who can come up with next move and play. For a good while as we'd lose such a person someone would fill the gap and things would keep going, well we eventually hit a point we didn't have someone with the necessary qualities to fill such a role. The problem is the company was effectively the longer you were there and the more you accomplished the more leverage you had, that said when you bring in a new guy who was supposed to give the company direction it goes against how the company worked for decades. Eventually this caused the company to flounder an turn to selling off it's assets.