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[Turtlejay]

Has anyone here read about the West Marches?

The idea you propose seems pretty much like a dungeon version of the west marches. I would recommend an earlier poster's advice and throw balance away. Design your dungeon for theme, with each level being fixed with fixed monsters and wandering monsters, and do not adjust for player level. I would also strongly suggest eliminating XP awards and moving towards milestone or quest reward leveling. The PC's level as they accomplish things, not kill things. This may help stave off the Diablo syndrome, where if you don't clean the entire floor you end up underpowered. Level them when they solve the puzzle that opens the ancient library, or decend past the catacombs. They should be aware of this out of game. Equipment should be plentiful, and give them access to the rituals to disenchant and enchant what they want.

I like the idea of them staying underground for months, with only their magic sustaining them (everlasting rations and the like). Have you played/read about the World's Largest Dungeon? I read an Actual Play here where they went through the top part of it. It seems sort of like your idea, only in 3e.

We are attempting some sandboxy type ideas in our current game, but it is not an easy thing to go from a mostly module running DM to a sandbox style rotating DM game. Does your group understand what you are trying to do? Are they willing to not just chase what they think is the hook you have prepared and truly do what comes naturally? Our game is not moving in that direction yet, but I still have high hopes. Good luck to you, it sounds like a fun concept!

Jay