Hypersmurf said:
My question - I have a Dex of 12, and take (say) Toughness as a feat at 3rd level. Some levels later, I gain a +1 inherent bonus to Dexterity.
Let's say I get level-drained down to 2nd level, and level back up to 3rd. I qualify for the Dodge feat (my Dex is now 13), and can take it as my 3rd level feat (rather than Toughness, which I took first time round).
Now let's say I don't get level-drained. Under the Retraining system, now that my Dex is 13 (not due to a level-based increase), can I swap Toughness for Dodge? Or does the fact that when I took the Toughness feat, my Dex was 12, prohibit it?

I'm never sure whether you're asking your questions tongue-in-cheek or not. My head hurts just reading it.
One point that's not addressed so far, I think: this brings long-term PCs up to snuff with just-built PCs. If you've been laying the game for two years, and a PC dies or a new player joins, virtually everyone allows the new PC to be created at a level close to that of the other party members. Because they're built at 10th level or whatever, they're at a decided advantage over the PCs who've been around since first level: they can choose a suite of abilities that works ideally for the level they're at, instead of choosing between
a) living with suboptimal feats for part of their career; or
b) Having a collection of feats that works pretty well, but doesn't have good synergy within itself and doesn't necessarily qualify the PC for a prestige class.
With these rules, longterm PCs no longer have that disadvantage. I see that as a major benefit.
Karinsdad, I think your analogy of domains-as-gifts is a little bit off. Deities don't give domains to clerics for the cleric's entertainment: they hand them out so the clerics can further the deity's will. They're employee equipment, not birthday presents. And deities let clerics choose which domains will work.
I might run an office wherein I supply each employee with their choice of a Mac or a PC, from a supply of each that I have in a storeroom in back. If an employee chooses a PC when she first starts working for me, but later on decides that a Mac will better enable her to do the job assignments I've given her, why would I object to her switching out her equipment? A good boss will see that different tools work better for different jobs; and if your trust your workers to choose tools the first time around (i.e., letting clerics pick their domains), why wouldn't you trust them if later on they say that their job would now be better completed with a different suite of tools?
I love things that give more options to players. I want players always to feel that they're doing something interesting with their characters, and the more they can mix it up, the happier I'll be.
Daniel