Unless I am mistaken, that doesn't include a lot of what I am trying to do, such as the combat and character setup.

It still does not look like what I am after =P Made a quick battle screen mockup to just solidify some things in my head.

There is EVERY reason she should go through all that effort. I personally love this idea. I'd use it all the time.

A lot of people have problems with D&D because armor exists to allow you endure damage, not elude it.  In D&D, THAC0 means "To Hit Armor Class 0", a collection of mistakes that means a catapult can hit a castle wall with the same facility as an individual sparrow, so long as they are both Armor Class 0.  There are a variety modifications that attempt to make sense of this essentially flawed premise, but they all essentially fail because armor protects you from damage and other things protect you from being hit.  

That being said, there are a lot of fun things about the D&D mythos, providing you can extract them from the fundamentally flawed conflict resolution premise.  And the notion that you learn French by killing Orcs.  And the concept of leveling in general.  (If somebody here has learned French from killing Orcs or suddenly became 5% more likely to withstand cyanide after being granted a certificate, I will cheerfully withdraw this statement.) 

There are a lot more interesting, fun, extensible, realistic and playable combat resolution systems than D&D.  If Elemental allows you to mod the game to the point where you can put both feet in buckets when that is your joy, more power to it.  Personally, I'd prefer a combat resolution system that doesn't displace machine gun fire because my plate armor dissuades the bullets from crossing my sillouette when I stand up. 

If you want a deeply fetishistic combat system that is more realistic, I'd suggest FGU's "Aftermath".  "Aftermath" does allow for quite effective swordplay and machine gun suppressive fire.  For a card based game, Paul Kidd's "Lace and Steel" (Various Publishers) has much to recommend it for playability and fun.

THAC0 is pretty old nowadays Things have moved beyond that...

As somebody who first saw D&D as an expansion of minatures combat rules put together by a Swiss Pike formation enthusiast, my view of avertive armor is somewhat jaded, I admit. THAC0 stunk as a way of arbitrating individual combat in 1976, and it stinks today despite the modifications and changes it's added.  It fails to describe fencing, archery, SCA combat, real mideval combat, and anything resembling firearms.  The importance of machine guns is that they produce a field of fire where any exposed target will be struck as a function of the amount and duration of exposure.  The difference between facing a Maxim in Flanders in 1916 and facing English Longbowmen in Agincourt in 1415 is largely a question of training and logistics, not ballistic probability.  A clothyard shaft in a cloud of clothyard shafts will punch through quite as well as a Maxim bullet for all concerned downrange. D&D combat takes that probability case as an exception rather than the rule.

I will continue to argue that levelling is a deeply flawed description of skills improvement and damage tolerance that leads to some very bad downstream effects.  Anybody who has dealt with massively multiplayer games, delicious though that revenue stream might seem, knows the many unpleasant ways power gamers skew the experience for all.  Levelling rewards exploitive behavior that ruins economies and gameplay experience for many folks.  Since Elemental is turn-based the "rat fix" obsessive behaviors of many power gamers is not as heavily rewarded, but it still bears talking about.  

I will freely admit there are some exceptions to the ability to handle damage that are worth discussing.  Marcus Luttrell's book "Lone Survivor" describes real world experiences that were incredibly harrowing, where SEALs endured numerous gunshot wounds and kept fighting long beyond rational human expectations.  Nevertheless, the events surrounding June 28th, 2005 are also notable because though the four SEALs on the ground all kept fighting through numerous hits for hours, 16 other special operators (8 SEALs and 8 160th SOAR crew) all died in moments when an RPG shot down their helicopter. (Of course one obvious conclusion is that it is safer to surround yourself with Afghan rock than American Jet Fuel.)

Another important testimony to the endurance of humanity under fire worth discussing is David Bellavia book "House to House".  Former SFC Bellavia describes in painful detail the actions that got him nominated for the Medal of Honor (which he probably put the kibosh on).  The amount of damage the terrorist fighters in Fallujah endured through a combination of pharmacuetical assistances was incredible. Later, Bellavia describes the kind of endurance US Army Infantry showed in their continuing efforts to clear Fallujah, which is another point worth discussing.

Both of these books describe different ways endurance to damage can be built up unrelated to any kind of artificial assessment such as a level.

It seems to me that you have a great deal of interest in the technical aspects of combat and warfare. I bow down to your knowledge on this subject, I know as far about real combat as I know from Close Combat II and III, which probably isn't all that much. But as someone who seems to a military buff, you'll never be satisfied with DnD, as you shouldn't. But DnD is definitely not a realistic system, hence the "dungeons" and the "dragons". I don't know jack about pike formations especially not a Swiss one, but as the DnD system has evolved it has become far more about mighty heroes and magic than a simulation of combat.

I've read the reasoning behind the AC system and it makes sense to me. Having one number determine whether you hit or not simplifies the experience and streamlines the game. You'll only be rolling damage for blows that matter. Even if you "miss", you're still hitting the other person, but the wounds are negligible or it glances off the armor or it gets parried. Also, I've heard hitpoints expressed as not only physical toughness but an ability to avoid blows, willpower, luck, and so forth, which also makes sense to me.

As for levelling, I don't have any experience playing mmorpgs, so I don't know how people abuse it. If you're talking about a point-based character creation system, then I've seen those abused too... where players just unload a ton of points into fighting and little else, punishing anyone who wants a roleplaying skill. When I ran my In Nomine game, players eventually ran out of places to spend their points, after they had all maxed out their various fighting skills. I feel at least in a level system there is always a place to advance and to look forward to. I've actually become somewhat disaffected by most non-leveling systems as I feel most of them aren't very well balanced.

There are some important points to consider here:

1. Combat is largely tactically defensive in many eras.  "Stealing a march" on your opposition was critical because that allowed you choice of position where you could defend from.

2. Units not prepared to die will often break, something notoriously missing from many strategy games. 

3. Units prepared to die to a man are scary as hell.  By the way, this is one reason Sun Tzu is quite condemnatory about surrounding folks.  Although there is some historical criticism of some versions of the Alamo story, Gen. Santa Ana was repeatedly proved a doof after that engagement.  If Santa Ana had bypassed the Alamo, leaving a guard to keep them in check, he wouldn't have used up difficult to replace food and impossible to replace trained troops. 

4. There are veteran troops in most every era (except possibly WWI, which was so wasteful as to diminish our civilization as a whole) and so although combat is quite lethal, there are ways of surviving it in most every era.  (Not charging machine guns in fixed formations is a big rule, by the way.)

5. LTGEN Lewis B. (Chesty) Puller lived.  My father met him on three separate occasions.  One legend that has a really scary ring of truth is that Chesty Puller on frequent occasions deliberately exposed himself to enemy machine gun fire to get the enemy to reveal their positions; he knew the timing of recognition, target acquisition, and the flight of shot so well that he would be down in cover before the bullets landed.  He knew this because he had survived over 100 combat engagements in Haiti, Nicaragua, China, the Pacific, and Korea.  Heroes of mythic stature exist in this world even if they don't swing swords or wave wands.  It is worth studying how they come about.

Sorta 6. One disturbing aspect of the recent conflicts roughly lumped together as the "War on Terror" is that there aren't any surviving Medal of Honor winners.  There are some reasons for this that may be a bit counter-intuitive.  Our troops are in better shape than any troops in history, and the greater physical condition reduces situations so screwed up that they require heroism that great.  Our troops are better trained than any in history, this also reduces situational screwups.  Similarly our troops are also better led and supplied than at any time in history.  Finally, the Medal of Honor is only awarded in situations where no reasonable person would fail to excuse the awardee from refusing to take the action, and I believe that our troops are open and honest about their doubts when they live as a function of their professionalism.  Nobody can ask those who died about their doubts: Paul Ray Smith, Ross McGinnis, Jason Dunham, Michael Mansoor, Michael Murphy, and Jared Monti.  It is also worth knowing how these remarkable heroes lived and died.

I hope this is for the 3.5 rules and not 4.0 (shivers with horror)

Stick with D&D 3.5 rules (there is no thaco in that rule set.)

Actullly guns are in the universe. You have the Flintlocks and d20 Modern/D20 Star Wars/ D20 Dragon (somthing I forget the rest of teh name basically D&D in space)  as well as other d20 games fit well with 3.5 D&D since they are they use the same basic rule system. And yes most guns/lasers do Touch attacks for archaic armor.

Why? (curiosity, I like both editions a lot although I find 4.0 superior in general)

Character creation depth? What was the depth in creating a 3e fighter? About the material, well, it was easy to do your own half-orcs while you waited for the official ones (although it seems half-orcs were a fan favorite, I have seen more people angry about that exact point).