In our game, it is possible, although very unlikely, to surprise someone after they are aware of you. So maybe you're having a conversation with your trusted and loyal contact when he suddenly punches you in the face.
There's a Conan RPG rule, from a supplemental book (not in the Core Rulebook) that allows Surprise-like actions (what you describe) without breaking the 3.5E rule that Surprise can only take place when the surprised character is unaware of his attacker.
I'm forgetting the name of the rule, right now. I'd have to look it up.
When I'm DMing, I hold off on actually tracking initiative until it's really necessary to know exact order of actions.
I think I'm going to start doing this. Rolling for initiative as soon as two parties are aware of each other seems nonsensical at times. If both sides are ready to fight, it's not a problem. But, if other ambitions are to be played, it seems too early to roll and put the game into slow tactical combat rounds.
Even if it's a clear enemy, sometimes not going straight into combat leads to more enjoyable game play.
For example:
GM: Your torch flares as you walk down the narrow, cob webbed stone cut corridor. The blackness ahead of you opens into a dark room. As you enter, you see the reflection of eyes some 30 feet away--it looks like cat's eyes do when you shine a light on them at night.
There's a pair of them, and they both seem to be looking straight at you.
A step closer, you're fully into the room. Your torch lights the place, and you can see that there are two green skinned goblins looking at you. They're not saying anything, and you don't see a drawn weapon, though they hold shields--and you can see each has his weapon hand concealed behind their shields. Each does has a shortsword, in its shagreen sheath, hanging at their small hips.
RAW 3.5 is pretty clear about starting the combat encounter at the awareness point. And, as I said above, this is fine if the goblins would act as expected and simply attack the PCs. But, for the situation I describe above, it sure would not play well in combat rounds. The goblins would most likely get a surprise standard action (which the GM would chose not to use given their demeanor), and initiative would be thrown just before the PC entered the room when he saw the cat's eyes.
The groups I've been in have played it by the RAW. But then, the (different) groups that I was in pre-3e played the same way (roll initiative at the start of combat, or maybe after the surprise round is over).
Yeah, I think in my 3.5E based game, I'm going to start ignorning RAW and just rolling initiative when combat is about to ensue--not on awareness.
In the example above, I'd keep playing the scenario in the free-form method until either the goblin or the PC started to make an overt action. If either the PC or the goblins attack, I'll have initiative thrown. But, the above could easily go into a role playing encounter, and it's not necessary or desireable to play out that type of encounter in combat rounds.*
*The Flat-footed rule makes a lot more sense if initiative is rolled by RAW at awareness. The rule becomes less-logical in a situation like the above. Let's say the PC closes to the goblin's threat range, and what the goblins had concealed behind their shields were daggers dipped in venom. As soon as the PCs approach, both goblins explode into action by stabbing at him with their daggers.
Playing it free-form up until that point, I'd say something like:
You: What are the goblins doing there?
GM: They're just standing there. Not moving. Eerily still, just looking at you.
You: Hmm. Strange. OK, I'm not going to draw my sword, but I'll keep the torch raised high. I'll approach the goblins with my sword hand open, palm towards them.
GM: You approach, and both of the burst into action. They have daggers concealed behind their shields. There's a high pitched goblin war cray, and both swing at you. Roll initiative. Looks like both won. You go last. That means they've caught you flat-footed.
Does that scenario seem like the PC should be flat-footed? By RAW, he certainly is because his initiative count hasn't come up yet.
Caught without his sword in his hand, definitely. But, caught with a sluggish, lowered defense as he approaches two goblins in this situation doesn't seem to be realistic or logical at all.
I can see the PC being flat-footed had initiative been thrown at awarness, as RAW indicates, back when the PC first saw the cat's eyes.
This is one of those things that falls under the
Rule of Unintended Consequences. You change one thing about RAW (rolling initiative on attack rather than awareness), and it effects something that you don't think of at first, creating other problems.