Not quite, but you're close!
I could create a power called "Li Po's Legendary Fist"...
Damage 6 + Modifiers: Multiattack 1, Penetrating 6, Precise 1 [14 points]
The Precise power feat may not be super useful on a melee attack, but it's legal. We can discuss the merits of specific builds once you have the structure down.
And then I'd create an Alternate Effect called, for example, "Nine Palms Diagram"...
This would have to also be Damage 6? But I could change up the modifiers however I wanted? So it might be...
Multiattack 7, Reaction 1?
And that would up the net cost of "Li Po's Legendary Fist" to [15 points]?
Nope! Each power in the 'array' is a separate power entirely. The only stipulation is that alternate powers have to be equal or lesser to the cost of the base power.
The way you're costing your modifiers looks a bit off as well. The power as you have it listed there would cost more than 14 points, unless I'm misunderstanding. I'll break it down.
Damage 6, 1pp/rank. Simple enough.
Multiattack 1, +1pp/rank. This brings the total cost to 12pp.
Penetrating 6, another +1pp/rank. Total cost is now 18pp.
Precise power feat adds 1 for a total of 19pp.
Note that Penetrating and Multiattack are a bit different. It's not uncommon to buy fewer ranks in Penetrating than one has in the Damage power, to reflect that when encountering impervious defenses, the power has a reduced effect. Multiattack on the other hand is applied to all Damage ranks. The effects of that modification would be hard to apply to partial damage effects.
You also can't buy Multiattack more than once. It has full effect with a single purchase; there aren't multiple 'levels' of Multiattack.
But I could NOT, for example, make a power called "Stop Hitting Yourself" which is based on a Deflect, because that's a completely different Effect from Damage?
You absolutely could. To make an example using hypothetical powers:
Li Po's Legendary Fist (total of 21pp)
Damage 6 + Modifiers: Multiattack, Penetrating 6, Precise 1 [19 points] 19pp cost
- Alternate Power: Nine Palms Diagram
Damage 6 + Modifiers: Burst Area 1, Selective Attack [18 points] 1pp cost
- Alternate Power: Stop Hitting Yourself!
Deflect 6 + Modifiers: Reflect, Redirect [18 points] 1 pp cost
This means on any turn, with a standard action, you have the following special options based on your powers:
You can throw a Legendary fist, doing a base damage rank of 6 which pierces impervious defenses and can do improved damage on a good hit, or potentially strike multiple adjacent targets.
You can do the Nine Palms Diagram...striking any targets you wish within 30' of your position with Damage rank 6. They can attempt to reduce the incoming damage with Dodge defense.
Or you can go on the defensive and choose to Deflect. Any incoming attack (at a penalty to your roll if the attack is on someone at a distance from you) is opposed by your Deflect roll. If you succeed the roll, not only does the attack fail, but you can redirect that attack onto another target of your choice, using your Deflect rank as the attack roll modifier!
There's very few limits other than point cost on what can go in arrays.
However, some powers work better than others. Remember that powers that are currently not being used are 'turned off.' This means if you have Protection in your array, but right now you're using your attack, you don't have Protection. If you have a telekinetic effect in an array, and switch to use another power...whatever you were holding up with TK falls to the floor.
This doesn't mean you can't have protection or sustained-duration effects in arrays. It's just something to be mindful of.
A good example of this is Grimoire's 'Magnus Warding' effect. It's a Create Object with sustained duration, which means she has to remain conscious to continue creating that effect. If she gets knocked out, it ends. But if someone gets in close to her, and she decides to switch to her Manifest Soul ability for self-defense...the Warding goes away. She has a tough choice to make, if that Warding is all that's keeping a group of civilians safe!
Note too that some powers have enduring effects on their target that don't require the power to be sustained. An example is Damage. Generally a power that does damage doesn't have that damage just disappear if the power isn't maintained. Afflictions work similarly. If I put Hexat (a curse spell) on someone, and then switch to another power, the curse doesn't just end. Afflictions in many ways work similarly to Damage, except they target different defenses and inflict different status effects.
The way to tell the difference is to look at the duration. A duration of Instant means the power takes place and then ends, and can be switched out safely after that, even if the effect lingers. A duration of Concentration or Sustained has to be maintained by the user, and if you switch it out in an array, it is no longer being maintained.
Hope this helps clear things up! You're right that point based systems have a steeper learning curve, but the results are very empowering once you've reached the top!
I could create a power called "Li Po's Legendary Fist"...
Damage 6 + Modifiers: Multiattack 1, Penetrating 6, Precise 1 [14 points]
The Precise power feat may not be super useful on a melee attack, but it's legal. We can discuss the merits of specific builds once you have the structure down.

And then I'd create an Alternate Effect called, for example, "Nine Palms Diagram"...
This would have to also be Damage 6? But I could change up the modifiers however I wanted? So it might be...
Multiattack 7, Reaction 1?
And that would up the net cost of "Li Po's Legendary Fist" to [15 points]?
Nope! Each power in the 'array' is a separate power entirely. The only stipulation is that alternate powers have to be equal or lesser to the cost of the base power.
The way you're costing your modifiers looks a bit off as well. The power as you have it listed there would cost more than 14 points, unless I'm misunderstanding. I'll break it down.
Damage 6, 1pp/rank. Simple enough.
Multiattack 1, +1pp/rank. This brings the total cost to 12pp.
Penetrating 6, another +1pp/rank. Total cost is now 18pp.
Precise power feat adds 1 for a total of 19pp.
Note that Penetrating and Multiattack are a bit different. It's not uncommon to buy fewer ranks in Penetrating than one has in the Damage power, to reflect that when encountering impervious defenses, the power has a reduced effect. Multiattack on the other hand is applied to all Damage ranks. The effects of that modification would be hard to apply to partial damage effects.
You also can't buy Multiattack more than once. It has full effect with a single purchase; there aren't multiple 'levels' of Multiattack.
But I could NOT, for example, make a power called "Stop Hitting Yourself" which is based on a Deflect, because that's a completely different Effect from Damage?
You absolutely could. To make an example using hypothetical powers:
Li Po's Legendary Fist (total of 21pp)
Damage 6 + Modifiers: Multiattack, Penetrating 6, Precise 1 [19 points] 19pp cost
- Alternate Power: Nine Palms Diagram
Damage 6 + Modifiers: Burst Area 1, Selective Attack [18 points] 1pp cost
- Alternate Power: Stop Hitting Yourself!
Deflect 6 + Modifiers: Reflect, Redirect [18 points] 1 pp cost
This means on any turn, with a standard action, you have the following special options based on your powers:
You can throw a Legendary fist, doing a base damage rank of 6 which pierces impervious defenses and can do improved damage on a good hit, or potentially strike multiple adjacent targets.
You can do the Nine Palms Diagram...striking any targets you wish within 30' of your position with Damage rank 6. They can attempt to reduce the incoming damage with Dodge defense.
Or you can go on the defensive and choose to Deflect. Any incoming attack (at a penalty to your roll if the attack is on someone at a distance from you) is opposed by your Deflect roll. If you succeed the roll, not only does the attack fail, but you can redirect that attack onto another target of your choice, using your Deflect rank as the attack roll modifier!
There's very few limits other than point cost on what can go in arrays.
However, some powers work better than others. Remember that powers that are currently not being used are 'turned off.' This means if you have Protection in your array, but right now you're using your attack, you don't have Protection. If you have a telekinetic effect in an array, and switch to use another power...whatever you were holding up with TK falls to the floor.
This doesn't mean you can't have protection or sustained-duration effects in arrays. It's just something to be mindful of.
A good example of this is Grimoire's 'Magnus Warding' effect. It's a Create Object with sustained duration, which means she has to remain conscious to continue creating that effect. If she gets knocked out, it ends. But if someone gets in close to her, and she decides to switch to her Manifest Soul ability for self-defense...the Warding goes away. She has a tough choice to make, if that Warding is all that's keeping a group of civilians safe!
Note too that some powers have enduring effects on their target that don't require the power to be sustained. An example is Damage. Generally a power that does damage doesn't have that damage just disappear if the power isn't maintained. Afflictions work similarly. If I put Hexat (a curse spell) on someone, and then switch to another power, the curse doesn't just end. Afflictions in many ways work similarly to Damage, except they target different defenses and inflict different status effects.
The way to tell the difference is to look at the duration. A duration of Instant means the power takes place and then ends, and can be switched out safely after that, even if the effect lingers. A duration of Concentration or Sustained has to be maintained by the user, and if you switch it out in an array, it is no longer being maintained.
Hope this helps clear things up! You're right that point based systems have a steeper learning curve, but the results are very empowering once you've reached the top!