I've been thinking about player advancement in the World, and I've been reading about how skill-based systems tend to be more difficult to implement and balance. I've also been thinking about relative balance of power, character permanence across tellings, and the effect of equipment.
But first, some light reading: http://www.eldergame.com/2008/10/designing-a-level-system/
We've already established that the bulk of progression comes in the form of knowledge about the current telling, buildings, settlements, roads, equipment and friends. Of these, all save for equipment persist through death (and even that is recoverable/easily replaceable.) At the end of a telling, however, structures are reset, a lot of game knowledge that was relevant no longer is, and for the health of the next server equipment will likely need to be wiped. So what binds a player to their character between tellings?
I'm actually thinking of letting them keep their skill-ups... which runs contradictory to the view that server resets should be a good time for newbies to get in on the ground floor. It's fixing that problem that leads me to my current vision of the skill system.
Skills begin at rank one, and increase rapidly to near-maximum. These numbers have virtually no effect on performance at the skill. Instead, what you get from practicing a skill enough to level up is advice on how to proceed in mastering it. Thus, each skill-up unlocks the next few pieces of a tutorial in using the skill. Finally, we can offer players a tangible (but small!) reward for the final couple of skill-ups, perhaps a 2-5% gain in effectiveness for combat stats at maximum (compared to rank one).
An example skill-up table may be as follows:
Swordsmanship Rank - Effect
1 - Start, UI offers the first page of the swordsmanship tutorial, explaining how to get a cheap weapon and hit something, perhaps a dummy or a tree. Level up almost immediately.
2 - Explains how to do the first (of many) melee special attacks, and tells you to preform one. Level up almost immediately.
3 through 5 - Explains more melee special attacks, level up after doing a few of each.
6 - Explains the Block mechanic, level up after preventing X damage through Block, which should take only 1-2 appropriately challenging combats.
7 - Explains the Parry mechanic, level up after preventing X damage through Parry, which should take 3-4 appropriately-challenging combats.
8 - This is the "you know what to do, and the last two ranks are going to take some real time spent being a melee fighter to get" level. Leaves you with an explanation of the uses of various weapon types, how to do your "rotation," and when to disengage from combat if you find your defenses depleted. Level up after a day or so of doing melee fighter type-stuff (not a whole day of solid combat o.O)
9 - +2% Parry and Block regeneration rate and melee damage. Comes with some more advanced advice about more advanced situations, things that would be a bit more overwhelming to someone who just learned to fight (rank 8). Level up after about one telling's worth of playing a melee fighter.
10 - Bonus increased to +5%. May come with some final tips about engaging the most powerful of foes, or overwhelming numbers.
For non-combat skills, we may not even grant tangible effects, the value may be in revealing secret techniques, or explaining advanced tactics.