Here is the message from my DM:
It's been getting kind of ridiculous. This is the third time we've had a situation where something happens unexpectedly or someone makes a sudden move, you can't be surprised ever, and then you roll a higher initiative, so it's like "This guy didn't make his move yet, but you just had a HUNCH he was going to suddenly cast Misty Step" or "PC didn't do anything yet, but you can just sort of tell that they are going to suddenly kick this guy". This isn't Diviniation magic, and you're not a Jedi, there's no way that being more "Alert" would cause you to predict events before they happen.
Comments?
Yeah, he doesn't understand the surprise rules and is inferring too much.
This doesn't mean you anticipate the caster casting Misty Step and can act before they start. It means they start casting, which initiates combat, THEN the surprise check is done. Everyone else in your party checks for surprise, and some of them might not get to go this round. You just roll initiative as normal and go when it's your turn.
So, if you roll initiative poorly, the spell goes off, and you still get thumped, before you can do anything.
All it really means is the attackers don't get a free round against you ever, where they often do against other members of your party.
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Now, if he thinks that means you get to react to someone beyond your range of hearing firing an arrow, or a stealthed Sorcerer that beat your Perception check hurls an Ice Knife at you (no Vocal component), then he's giving it too much power. There are plenty of circumstances that will catch you flat footed the same as everyone else. This feat is really about melee combat.
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Also, his complaint about the Jedi stuff - it's widely known that people who intend to do violence give off all kinds of 'tells' that are obvious to skilled observers. They get fidgety, they look around a lot, they unwaveringly focus their attention on their target, stuff like that. If you can see the people who are going to attack you, you have evidence and cues that you can react to. If you're aware and anticipating it, you can act quickly enough to thwart what they want to do, the same way I used to catch stuff as it was falling off of a shelf when I was doing martial arts for several hours a week.