There are tournaments, but they are rare in the United States. This game is more popular in Japan. If you find one, Instant Kill will usually not be allowed, and even if it was a good player will capitalize and kill and individual who tries to use it before they get the chance. I've followed Guilty Gear since the first one came out on PS1 (which was not the refined masterpiece the game has since developed into; excluding Isuka).
Tournaments I've played in (for X and XX, not for XXAC) here in the United States usually have a buy-in, and the players are very skilled. Knowing how to combo (and combo well) is a must, so is knowing how to effectively use all the unique traits of the series (False/Roman Cancels, Counter Hits, Air Combos, etc.). A lot of good players spend time learning or creating combos with their character that can rack up some hefty damage if you leave yourself open just once. Basically, I'd prepare a lot before entering a tournament if it has an entry fee, otherwise go nuts. :D