I'll divide my post into three sections:
1) PREVIOUSLY MENTIONED ISSUES
a) Class Names: This to me seems like the easiest possible fix. To be honest, class names are actually pretty irrelevant, especially in IH, which actually bothers to state what I think the core books should have as well: Class doesn't define you; rather, it defines what you can
do. In a way, it's almost good that the class names aren't necessarily great, because it leaves all the really appropriate terms for PC roles up to them: A "thief" is just as likely a bard, tinker, minstrel, rogue, vagabond, or landless noble, as a hunter is just as likely a warcaptain, ranger, Officer of the Watch, etc. My PCs never define themselves using their IH class names.
b) Base saves: I guess you could adopt an easy "fix" if you don't like the uniform saves: Just use the Poor/Average/Excellent BDB values listed in the IH book for base saves. However, certain character types are going to end up with differentiated saves due to their choice of ability modifier: An armiger, for example, is almost always going to have a much better Fort save than Reflex save, and vice versa for the Thief.
c) Skills and denying active defense bonus: Really, there is a single major issue here, which just needs a house rule fix or two (but these are much more moderate house rule fixes than some of the things I've had to do in D&D!). The trick is to allow the two skill uses that deny active defense bonus (Jump and Tumble) to only deny such bonus for the attack following the skill use, rather than the whole round. That way, it's only a single "gimme," which IMX is pretty balanced. The second optional fix is to split class defense bonus into half active and half passive, which IMHO will make it much less deadly to be in a situation in which you're denied your active defense bonus.
d) Magic. Oy vey. The funny thing is that the IH system actually playtested pretty well with our group (we ran a 1st and a 7th-level pregen PC short adventure to see how the system worked), but it's certainly slightly wonky and less exciting than might be desired. The nice thing is that it's also purely optional. You can easily throw the arcanist and IH magic system out the window and use pretty much anything else you feel like, as long as it doesn't have reliable AC, attack, hp, save, or skill buffs for other PCs.
2) POTENTIAL DOWNSIDES
a) Tactical nature of play. If you don't like your players to have umpteen options, IH is not the way for you. Actually, the complexity of the game compared to D&D is entirely optional; players don't HAVE to use the challenges and stunts, but they get a benefit from them if they do. In any case, I've found that a session or two is enough to get players comfortable with the IH ruleset.
b) Power level. IH is emphatically NOT for DMs who want a low-powered setting, and it's difficult to dial down the power level if you want to. I'd suggest Grim Tales if you're looking for a grittier option.
c) The Armiger and Weapon Master. Both of these classes need some work. However, I've found some excellent fixes that have worked pretty much perfectly:
-Harry Pratt (aka Soulmage)'s revised armiger
-The Weapon Master house rules posted by "Braro" on
this thread
d) Potentially too many skill points. I like the IH skill groups a LOT, and I think it's actually a really good thing that every character in the party has a skill contribution to make; however, I'm wondering if they didn't go a bit overboard. Anyone with a vaguely decent Intelligence can have ranks in practically every skill except Craft, Profession, and Knowledge, making one wonder why to have skill points in the first place.
3) ASSETS. In addition to all the others mentioned above, I find that IH has the following benefits:
a) Modeling subtle-magic universes. While IH does offer the advantage of theoretically supporting a completely no-magic campaign, I find that it also works to mdel what I see as the default fantasy/mythic universe: One in which there's a very blurred line between exceptional skill, rare talent, raw force of personality, or god-given prowess and actual "magic." Is Saruman's irresistible voice just a charm effect or a product of his extraordinary eloquence? Do men flee from terror at Achilles's rage because Athena's enspelling them or simply because of Achilles's force of personality? Feats like Devious Manipulator and abilities like Primal Howl, as well as the default power level, allow you to keep that line blurry.
b) Feat masteries. Not only are these an elegant alternative to feat chains, but they can be used quite effectively to customize a character to fit a particular archetype. I'm already working on a Highborn feat chain (for the Thief, primarily, since it'll be Social) to offer some of the benefits of the Noble class from Conan, as well as a music mastery feat to confer some of the abilities of the Bard and Virtuoso that aren't captured under the Perform skill.
c) More feats! IMX, more feats mean more fun for the players. Players LOVE getting to choose more neat attributes!
d) The trait system. Lots of d20 material has these already, though, but I certainly wouldn't play without traits ever again.
e) More uses for skills. My biggest disappointment with 3e was that, while it introduced an excellent skill system allowing for substantial PC customization, several skills simply weren't hugely useful. IH's skill uses allow much more utility for skills prior to achieving those insane three-figure DCs from the Epic-Level Handbook.
f) Less hoop-jumping. Optimizing PCs in D&D usually requires a reasonably defined set of PrC, magic item, and buff strategies. IH effectively allows you to build an optimized character just using a class, feats, and skills, which has seemed more straightforward than D&D Character Optimization, at least to the players in my current game.
g) VILLAIN CLASSES! These have to be the. best. DM labor-saving tool. ever. Fast NPC builds that represent well-defined, challenging archetypes. Nice.
h) Zones. Yes, these add some complexity to the game, but on the other hand, they provide well-defined mechanics for those sorts of fun situations that DMs love to spring on their players. Narrow stone bridges over lava flows? Rockfalls? Warehouses full of tumbling barrels and made-for-acrobatics stacks of crates? Good stuff.