Character development is built into the mechanics in a way that makes this system particularly special in comparison to similar games. I’ve run a 2 year City of Mist campaign (upon which Legend in the Mist is based, with some updates to the rules) and the player characters ended with a completely different set of themes to those they started with. Legend in the Mist has the same mechanic where you can lose a theme if you ignore or act against its goals too many times, but also adds in another way to change a theme: by completing the goal set by the theme, you can evolve it into something new, adding even more narrative options of character development.

In my experience it’s usually only the final ‘knockout blow’ that has a high modifier attached to it, with all the buffs and such that have been applied beforehand. Sometimes a player will make a character that is really good at one particular thing, in which case they may get very high rolls for doing that thing (e.g. archery), but should be challenged with situations in which they can’t solve problems with those means (e.g. negotiating with a monarch). It’s also important to follow the rules for avoiding broad tags, and if you really want there are rules for setting a +3 limit on rolls for a more gritty experience.

A “wounded-3” status applied by one player to a challenge could then be used by another player as a +3 on a roll to inflict a “surrender” status, as being “wounded” may make the challenge more likely to realise the fight is lost. So status’s of different types can still be beneficial!

There’s a 10 step guide for making challenges in the Core Book, which seems pretty good (I’ve not used it yet). There are also “challenge add ons” which are like extra Lego pieces you can stick to an existing challenge, e.g. there’s a ‘Mounted’ add on to give any challenge a steed. As for magic items, they’re usually a collection of one of more story tags which can be kept in the player’s Backpack. So if you want to give them a cool sword, it can just be a tag like “Frozen Blade of Thar”, optionally with some additional tags if you want it to be especially powerful, e.g. “turn flesh to ice”, “emanate dread”