Abstraction said:
I think you'd just about have to be trying to in order to get a penalty.
First, thanks to all for your suggestions and comments. This will probably become a general house rule in all my games, because I'm coming to like the idea more and more as I think about it.
Second, XP penalties are coming up in my game right now. One PC is a Elf/Half Dragon (Crystal) Druid. (Yes, I know Half-Crystal isn't normal, but it was part of the character concept and 3.5 Half-Dragons are so modular, just make the elemental resistance and breath weapons Cold based and the rest is roleplaying). Since Gem Dragons are the psionic dragons, she wanted to cultivate some psionic powers and wanted a level of psion. Neither Druid nor Psion are the favored class for an Elf, so she'd suffer a permanent 20% XP penalty for doing something that's within her character concept and roleplaying, and I don't like that one bit. Every PC in this campaign is an Elf, except for one Half-Elf who is a single classed monk but considering multiclassing.
Thus, I want to make the rules fit the game by eliminating multiclassing penalties, while not removing a racial advantage of Humans and Half Elves. The thing I like most about 3rd Edition over 1st/2nd is that there are a lot fewer arbitrary restrictions imposed, and this seems like one, so I'd like to ditch it but in a balanced way.
Third, I don't want to give a blanket skill point bonus, since I already give +2 skill points/level to all classes (I added the Gamble skill from Star Wars, Research from d20 Modern, and Language skill rules from the EverQuest RPG which requires ranks in languages), so my PC's already get a good number of skill points, and that would also help single-classed characters. I'd like an advantage that really only comes into play if you multiclass, like the old one did and this does. I also don't want to reward stereotypes by giving bonus feats for staying in favored classes.
3.x multiclassing and it's Favored Classes are a significant improvement over earlier editions, but as other d20 games without favored classes (d20 Modern, Star Wars, Wheel of Time, Spycraft, ect) have showed me, it's really not needed for the system or for balance.