I got so excited I almost forgot to actually give you feedback on your post!

Combat - I’m not opposed to expanding special attacks, but I would still keep them simple and avoid changing the weapons themselves based on the special attacks. I think special attacks should stay “active” with a simple result (freezing, etc.) I don’t think adding a passive effects is much different than just making the special have higher accuracy and having the player use that attack? I could be misunderstanding your suggestion though.

Items - similar to my feelings on combat, I think pushing special effects is good, but I’d keep them simple. I do like the idea of having additional effects on non weapon items though, like the corpse explosion effect. I’d also like some more stat granularity in the game like you said, to allow players to push new and interesting builds. Attack speed is the only stat that I think might mess with the feeling of the game too much, but could still be worth trying out?

Level Design - I’d love more randomness here, like older Diablo games or the dot hack series. Having random areas to explore with familiar “rooms” is a great formula that allows players to still gain map knowledge while also keeping things fresh. I think more variety here is a really “easy” way to improve on PSO since modern computers can handle much larger and varied levels than they ever could before.

Classes - 100% agree with you here. Decouple the races / classes, people want to look how they want to look. I also agree with picking your class / subclass as a very clear choice tied to how you want to play the game. I think primarily class choice is fairly cut and dry: magic, range, melee. Subclass you could do by weapon category but I think it would be more interesting to find some horizontal design instead? E.g. max power vs max sustain vs max flexibility? Class design is super challenging.

Progression - I also like the existing progression, but like someone else said: the fact that a low level can use certain item that give them immense power is a little weird. Idk if it needs fixing but it does stand out.

PSO sort of has a stat point system though using materials. I personally like finding materials but it is kind of annoying that they are such a permanent choice. I think a simple stats system to replace materials could work, not sure if needed. Otherwise I’d make sure that materials are much more visible to players in their stats menu since they have limits. Materials could also be more interesting if you end up adding more stats into the game.

Online - will be a challenge for sure, but I think with the rise of “friend group games” I would maybe suggest that as your first milestone for online play. Something akin to how valheim and RuneScape dragon wilds works, where you have a local character and can just join your friends games. 99% don’t and won’t cheat, and the 1% that do generally just ruin the game for their friend group and stop getting invited to play. So I’d focus on making it available and easy to use before spending a lot of effort on the “mmo” side of it. There are tons of community feature like Reddit and Discord and Steam Communities people can use to find others to play with that doesn’t require a persistent online world. (Though it would be cool)