In a municipal scale sewage system toilet paper is barely detectable. It gets soggy very quickly and disintegrates. There are huge problems with wet wipes, tampons and menstrual pads, however, as those do not break down and need to be extracted and disposed of (this is an extremely gross process).
In a home septic system the same situation applies but in a more visible way. Toilet paper disintegrates then breaks down, with the cheaper paper apparently being better.
To answer your specific points:
it will decompose somewhat into methane, carbon dioxide and water, but the cellulose content will mostly make it through the process unchanged.
the material after treatment is very fine, even if it didn't disintegrate before treatment, so the wildlife affected will be mostly microscopic and they will either eat it or ignore it unless it's in sufficient volume to smother them.
mostly what's consumed is energy. Different sewage treatment systems work in different ways, but the most common decomposition step is settling ponds with agitators to encourage aerobic decomposition (ie, less methane and more carbon dioxide produced). Chemical are mostly added when there are problems, and normally problems are chemical contamination when criminals dump toxic stuff into the sewers. Fixing that can mean rebalancing PH, other chemical neutralising agents, or simply excavating the affected ponds and restarting them with "clean" sewage (non-contaminated). That last is expensive, messy and slow, so most sewer systems will go to considerable lengths to prevent those problems.
