Can you say a bit more about the mechanics of this. In particular, (i) what is the "item" modifier, (ii) what skill did Loukamon apply, (iii) is the damage being dealt just the normal amount, and (iv) how do you handle conditions other than ongoing damage?The description of the action determines the modifiers applied. Everyone except Loukamon is using the "Item" modifier since they are making direct attacks; Loukamon, since he's burning the brush, "directly affecting" the rats, gets to apply a skill.
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Loukamon and Krix ended up with a few rats crawling in their pants and armour (ongoing damage). Loukamon was bleeding pretty bad from all the bites and hundreds of rats were about to swarm him. His action was to try and shake them off - spending his Second Wind; he made a roll to determine when in the round he'd take his action, but I forget what it was (total defence). Meanwhile the other guys were busy pounding on the rats.
Is there a Burning Wheel influence here, or from some other system, or just your own ideas?the description of your action carries a lot of weight.
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Ian lost his action - the rats he was trying to kill were dead - because he didn't describe an action that would allow him to act if those rats were killed before he went.
It also makes combat pretty chaotic, which I like.
How did your players respond to a near-TPK in the second session?It'll be a good test of the system to see if the difficulty is too much or to little.
I also like the fact that all of this was set up by the players; I did nothing but sit back, maintain consistency of the game world, describe it to them, and run the NPCs. So far so good; we'll have to see what happens when other, long-term aspects of play start to arise.

(Dungeons & Dragons)
Rulebook featuring "high magic" options, including a host of new spells.