There is no "extent" to which CRDTs are conflict free, CRDTs are by definition always 100% conflict free.
"No matter what the consensus system used be it CRDTs or OT"
CRDTs and OT are worlds apart. CRDTs are guaranteed to be conflict free, whereas OT is generally too complicated and unproven to offer that guarantee at all.
"If editing a block of text and two users try to replace the same word with another word there are a number of possible outcomes"
There are actually many more possible outcomes than those you listed, so that with CRDTs designed explicitly for collaborative string editing you can provide perfect intent-preserving merges to the user. There is an excellent paper on preserving intent, see "Replicated abstract data types: Building blocks for collaborative applications" (http://dl.acm.org/citation.cfm?id=1931272")