Object upgrades character?

Does your character use the CharacterController? If so then he should have a rigidbody (if not he'll need one). Now all you need to do is attach collider to the object he will "pick up".

For example, let's say that you have a pill as a powerup. You can attach a box collider to the pill and size it so that it fights tightly on the pill. Then you check isTrigger on the collider component (in the inspector for the pill), which makes it to where your player doesn't actually collide with the pill and instead simply notifies the pill that it has entered its collider. This will allow you to handle the collision yourself.

Now all you have to do is script the events you mentioned.

 public class PillScript : MonoBehaviour
 {
     void OnTriggerEnter(Collider other)
     {
         if(other.tag == "Player")
         {
             // Get the special script on your player that allows you to control it.
             YourMagicalScript yms = other.gameObject.GetComponent<YourMagicalScript>();
 
             // Disable the fire effect (store/find a reference to it so that you can grab from your character here)
             yms.FireEffect.enabled = false;
             yms.DifferentEffect.enabled = true;
 
             //And if you want the pill to go away, then all you have to do is call destroy on this scripts GameObject.
             Destroy(gameObject);
         }
     }
 }