Since you cap at 5 ranks in a skill, a rogue with a 20 starting dex can never improve Stealth, Acrobatics, or any other Dex based skill? Worse, a rogue with an 18 dex can improve a dex based skill, but it cost him 5 skill points for a +1 bonus. I understand why it bugs people, it bugs me

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Hell, even if you just sum Stat + Skill Rank with a +5 cap, you run into system mastery problems. If a character ever increases a stat (say from 16 to 18), if they didn't plan for it from level 1, they could easily lose a skill point. Say Dex 16 and Stealth of 2 to get a +5 bonus on Stealth checks. Dex goes to 18. Now you've wasted a skill point.
So there are some design flaws with either/or. It has system mastery issues and leaves very little room for PC growth in a skill.
This system could work with a few changes.
- Sum Stat Modifier and Skill Rank
- Make the Cap +10
- +5 is the maximum modifier from a Stat
- 5 is the maximum rank in a Skill
You've accomplished your goal in bounding skill checks and you don't end up with system mastery issues (ie, players being punished for not planning for increases to Stats). PCs can improve, but a 20 is still going to be a hard DC to hit (a +10 is going to hit it 55% of the time barring other modifiers) and 30 is going to be all but impossible barring special circumstances (+10 has a 5% chance barring additional modifiers).
Now we just need to solve that pesky Multi-class problem