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Modular rulesets, hey? Interesting. Something that might finally divest the game of power creep. If newer, more powerful rules are added to the game, they cost more to impliment. So long as the costs are well balanced....
I think it's more heading back to the Magic the Gathering style of character optimization that characterized 3rd Edition, combined with the "Complete X" books.
From a business perspective, this is awesome; you can get the core rules, and then if you want your character to keep up, you have to buy the correct "Book of Awesome Character X", with one sourcebook for each class or power type. Even better, if you join a group using options A-X, you'll be obligated to get the option books for your character.
This works even better with DDI; WOTC can emulate the highly successful Korean mmorpg model, where the basic character types are available for the basic monthly subscription rate and then additional options would be available for an additional monthly fee.
The way it will work will probably be similar to the current DDI where characters are stored online. However, the shaved elements of the character will only be available when the proper level of subscription is paid. So, if one month you only spend the base $5.00, you only can access the base sections of your character sheet. If the next month you decide to spend the extra for Options A and B, you can print out a character sheet with those options, but not option C.
The neat thing is there's no limit to the amount of add-ons and options that can be given; maneuvers, magic, items, character art- it can all be done as monthly payments or one-time fees.
Wow, I am indeed impressed by Merl's plan. It looks like D&D is going to join the 21st century.