Very similar to the later Next Generation episode "Liaisons" from the seventh season, "Allegiance" may best be viewed as a light character study of Captain Picard.
Aliens decide to observe members of the crew, a common launching point for episodes in the franchise (other examples include Pike in "The Cage," the first pilot of the original series, and a number of such instances from Voyager), which in this case is limited to Picard (although taking leadership notes from him became a whole thing during the run of the series, epitomized by the book Make It So). He winds up in a prison cell with two other individuals. He's replaced aboard the Enterprise by a doppelganger. That element is itself another reason to give the episode far more credit than it deserves, in that it is reminiscent both of the Duffy character from "Conundrum," another Next Generation episode, and the Mirror Universe from "Mirror, Mirror" (an original series episode) and various Deep Space Nine adventures. In fact, the fake Picard is a lot like what it would have been like to stick with a Mirror Universe substitute for an entire episode, or even "Turnabout Intruder," the final episode of the original series, where this plot device also occurs...
Okay, so there are plenty of connections to be made. I still stick by the assertion that "Allegiance" is after all a minor affair and tentative in its results, and therefore not nearly as significant as it can be made to seem. It's fine, nothing terrible, but not otherwise notable, not really worth talking about, fun to watch but that's about it. Just watch it for some light Picard material.
franchise * series * essential * character
Memory Alpha summary.