An improved cavity configuration continuous-wave mode-locked optical parametric oscillator (OPO) suitable for two-frequency femtosecond pump-probe spectroscopy is described. The OPO is based on intracavity pumping of a KTiOP04 (KTP) crystal in a colliding pulse mode-locked dye laser, and produces femtosecond pulses at a 90 MHz repetition rate at average powers of 22 mW at 620 nm and 1-2 mW in the infrared. A model is synthesized from existing laser and parametric oscillator theories, and numerical simulations reproduce some qualitative aspects of the parametric oscillator's behavior. The theory accurately predicts the renormalization properties of the pump pulses in the presence of a nonlinear intracavity loss, and the existence of megahertz intensity oscillations on the output power envelope for excessively self-phase modulated pump pulses.