What are the connotations of "Oseh Chesed la'Alafim ... "?
Seforno: Still with reference to the wicked idolater, Hashem sometimes waits as much as two thousand generations for his descendents to do Teshuvah, due to the merits of an earlier ancestor whom Hashem loved.
What is the difference between "Ohavai" and "Shomrei Mitzvosai"?
Rashi and Ramban (citing others - including the Rambam in Peirush ha'Mishnayos): "Ohavai" refers to Tzadikim who serve Hashem out of love, and "Shomrei Mitzvosai", to Tzadikim who serve Him out of fear. 1
See also Ibn Ezra.
As the Torah writes in the Sh'ma "ve'Ahavta Es Hashem Elokecha ... be'Chol Nafsh'cha" (Ramban) - such as Avraham, who Nimrod cast into the furnace when he refused to acknowledge his god, and whom Hashem describes "Avraham Ohavi" (in Yeshayah, 41:8 [Ramban]).
See also Ramban DH 'u'Matzasi bi'Mechilta', who elaborates further.
How will we reconcile this Pasuk with the Pasuk in Devarim (7:9), which gives Hashem's time-period of reward as one thousand generations?
Rashi (in Vae'eschanan): Because, whereas here it places the figure of two thousand next to "le'Ohavai", there it places it next to "Shomrei Mitzvosai", 1 a lower level of serving Hashem.
Rashbam: "La'Alafim" is a continuation of "Banim", "Shileishim" and "Ribe'im" 2 , and means children of the 1000th generation, just as the Torah writes in Devarim.
Bechor Shor: "La'Alafim" means without limit. Hashem increases love when generation after generation serve him.
Rashi writes that Hashem's Midah Tovah is 500 times greater than His Midah of punishment. Midah Tovah enables 100 Yisraelim to chase 10,000 enemies (Vayikra 26:8), and the Midah of punishment enables two enemies to chase 10,000 Yisraelim (Devarim 32:30), i.e. 50 times as much per person!
Moshav Zekenim, Rosh (Vayikra 26:8), Tosfos (Sotah 11a DH ul'Olam): Midah Tovah enables each Yisrael to kill 100 enemies. The Midah of punishment enables enemies to chase more Yisraelim, but they do not kill them.