Elephant number one:[/B] One is ALWAYs on. The other is NOT always on.
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Elephant number three: One models AN EXPLOSION. The other does not.
Elephant number four: One is a CONSUMABLE (and freely available to everyone). The other is not.
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Elephant number eight: One fits narratively into a variety of PLAYSTYLES. The other does not.
Some responses.
The sword came from a shop, too, and is also consumable (eg via being dropped over a cliff, or eaten by a rust monster, or sundered by an anti-paladin).
The grenades can be "always on" - for instance a mid-to-high level PC who has a pouch of holding full of grenades.
And the "modelling of an explostion" fits only two playstyles, as far as I can tell - a "player fiat" playstyle (which GWF also fits) or a "causal indifference to process sim playstyle" (which I would have thought GWF might fit, depending on the contours of the casualness). It certainly doesn't fit a process sim style, and if you look at games with underlying process-sim mechanics you'll see that they don't handle explosions via auto-damage in the D&D style.
My suspicion is this is a territorial thing. Alchemist fire, that could be used by anyone. The spells that do damage on a miss, which are more effective, are exclusive to spellcasters. I suspect people don't like GWF because it's stepping on the toes of the spellcasters in doing damage on a miss in a way that they cannot also use (unlike alchemist fire, which they could always use if they wanted to).
I have a different hypothesis, namely, that for reasons that I don't reallly get (but in this debate are being linked to "realism") people are happy with auto-damage from explosions but not from swordplay. For some reason they are comfortable with the idea that an explosion can't be evaded, even by an air elemental or a pixie or a graceful dodger who is on the very edge of it, but are not happy with the idea that a swordsman or halbedeer can't be (completely and safely) dodged.
It's entirely possible that a person might have no chance of avoiding an explosion that goes off right next to them. In that case, evasion is stretching reality, not automatic damage.
I was thinking of the kobolds and commoners on the very edge of the explosion. Why do they die automatically?
Conversely, it's absurd to think that a person (with varying levels of defensive capability) would have no chance whatsoever of avoiding a sword from a moderately skilled warrior.
I don't find it particularly absurd that 6 seconds of confronting that warrior in melee might wear a person down.
And I don't find the fiat aspect - which is particularly handy for cutting down goblins and kobolds - objectionable either.
They share a single thing in common: that it is possible to roll a dice, miss the target number and still potentially get an attack. But even that's not quite right because with the alchemist fire, its only the potential, within a very narrow range of possible actions to get a positive result on a miss.
Unless I've badly misunderstood, if I throw the alchemical fire from within 10' (1 range increment) then I am guaranteed to get damage (because I will land no more than 1 sq from my target, and do 5' radius spash damage). That is not a potential; it's a certainty.
I don't think they are quite analogous, but you can fix those issues by allowing a DC 15 reflex save to take no damage. Problem solved.
Wouldn't this solve the problem with auto-damage from a GWF too? As some posters (@Manbearcat and [MENTION=205]TwoSix[/MENTION], I think) have suggested upthread?
Thinking like a designer for a moment... if you solve the problem of the graceful dodger being affected by the juggernaut by giving said dodger more hp what you are doing is extending the duration of the conflict, in effect creating more grind in fights.
Huh?
Any mechanic that makes them less likely to take damage (including a mechanic that lets them avoid auto-damage) will extend the duration of the fight.
Or, to flip that around, part of the point of auto-damage is to reduce combat grind.
Which gets to another reason the damage on a "miss" is problematic. It creates a series of necessary additional changes to keep the modeling the same. But each additional "fix" is going to add that much more unnecessary complexity to the game.
Like your solution for auto-damage from grenades?