wrt damage formulas:
I would say that I wouldn't change the formula of powersoul, but rather just move it to late game (such as it's location in shinra building). Honestly I was pretty disappointed to see that Death Penalty had it's stats changed and is just a regular weapon, same with Cid's item. Aeris's final weapon targets the enemy by default even though it heals you? I also felt this was super underwhelming to just get yet another healing staff. Also it seems like all of the other ultimate weapons are nowhere near the strength of cloud and tifa's, or have really wonky boosting like RedXIII or Barrett, which seem impossible to have good damage? I guess you could maybe Goblin Punch with RedXIII while limit gauge is full...? I would really like an incentive to *not* use tifa in every major fight, but there just isn't one. She even outclasses Vincent for dps because Vincent's Limit Break ruins his ability to stay on the attack. Maybe if he has fury ring, but I like being able to have control of my dps unit. Chaos is pretty insane tho, but not always great, and the Satan Slam ability is pretty underwhelming in the vast majority of relevant battles. I do understand why Death Penalty was changed - in order to prevent players from using the overflow glitch, yes? Wasn't sure if maybe there was just some other way around this. Ignoring defense is interesting, but hasn't proved to be useful in many situations.
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On lv4 breaks & ultimate weapons:
I wholly believe that you should be able to feasibly grab every item you need to build your ultimates before the northern crater (this is true for a few weapons, but you have to pull of some one-chance-only & difficult morphs. having to morph a guy that absorbs hp with their attack while I've got to beat the timer on corel train is pretty frustrating) as opposed to of having to farm most of it inside of the crater then walk back out. Lots and lots of players don't even touch northern crater until they are ready to end the game, and I'm seeing a lot of people are getting bamboozled by there being an extra script in the game at the bottom of the crater that unlocks doing sidequests outside of it, missing it entirely and asking here because they haven't descended. It takes a lot away from the game to feel like you can just go in and out of north crater like a cakewalk, when in vanilla it seems intended to be a brutal boss rush down to the bottom with no return, only with an exit for if you are completely wrecked and can't go further down.
I do like the idea of Monster Hunting and having to track down rare monsters to morph or steal the ultimate weapon materials, but I would like to just see them somewhere outside of the crater. It would be really awesome if you *didn't* ever need to use the reference guides because someone in-game (my vote is for the sleepy guy cave near junon) to provide you with hints about where to look for all of your ultimate weapon pieces. I think the guy does in fact do this talking about Godhand in the ancient forest, but It would be much nicer if you could just ask him for hints from a list and ditch the randomized script once you're in disc 3. Also, does this guy still give you something special for coming to talk to him when your battle counter is set at all the same number (222, 444, etc)? Could easily still have this checksum in the guy's dialogue by giving him a "what else ya got?" option after asking for hints.
In addition this, I would say that the placement of peoples' key item required to forge their ultimates is also kind of jank. Some of these are just arbitrarily rewarded to the player after fights or laying around with no context or script, even though they hold huge significance...? Like the Gospel Spark is just sitting in a crater room, the 7777 needles are after a materia cave, but no other materia cave gives you an ultimate item? Micro Engine and LuvLuvG I wont even get into. Just seems very haphazard.
Ideally I would like you to trash all of the Troll item scripts, such as the dead end sense materia at the shinra raid, the potion where barret's missing score was, etc. and replace them with the synthesis items for ultimate weapons. That'd be great if you opened that chest that only shows up if barrett is around, and you got the Max Ray or Micro Engine, etc. Easily you could move the Mirco Engine there from the Dark Cave, and then Barrett's script could go from going "Oh..." to "What the $*@^# is this?? Cid! maybe you can figure this thing out??"As for LuvLuvG, it would be really funny/cute if Rude gave it to Tifa at the end of the final Turks fight. Rude could just go "....." "....." "....A parting gift." Aeris's Gospel Spark I'd like to find Midgar, such as at the church or at her house. Just thinking I'm grabbing a materia and it's her item in some room felt pretty lackluster. Maybe use that Masked Man sprite from Dark Cave and put him in the church, guarding the item. Could toggle on or off depending if Aeris is dead.
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For chocobo breeding, I just want to neg out the chance of getting a vanilla chocobo while breeding for a special one, and make ranking up your chocobo in the races not be a thing. Chocobo Racing to rank up, specifically just to get a better % of breeding the bird you want, is a grueling process. And, literally nobody wants to have to reset their game over and over trying to get the right one to breed like in vanilla. Cooldown isn't a big deal.
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Another question: Are your characters naturally weak to any elements, like poison? They are humanoid but wasn't sure if this was clarified. Stuff like this I'd like to see clarified in the tutorial rooms. Also the facts about hidden element etc. Would LOVE if you could just tell the player about cut/hit/shoot etc elements and update the weapons to tell the player what elements those are, or even just update Sense scripts to say if enemies are weak to hit/cut/shoot etc.
Small side note about statuses:
I did noticed that someone mentioned that you can Frog Nemesis and that status use does have some play as you've stated. I do like these things. Nemesis can still slap you with 8000+ damage attacks while it's a frog, so I wouldn't change it just for fun. Honestly it was a huge relief to see that the mobs could just get rid of themselves without causing a ringout, as the ringout makes that fight way, way harder.
On NT quests:
The Aeris & Cait Sith sidequest fights are weirdly harder than all the others, just due to the huge variety of stuff the enemy is doing? Tifa's, Cid's, RedXIII's and Vincent's were a cakewalk, but Barrett's, Yuffi's & Cloud's were definitely very fun and challenging - had to equip a Touph Ring to get past that Meteor attack from Zack. Dispel is definitely the MVP of this hack.