Exalted Version Three is not an attempt to modify Exalted as a third version would, but to expand and improve it into a game equal in quality to the megalith of fantasy gaming that is Warhammer (at least old school Warhammer.)
Paradigm
One of the most glaring issues with Exalted in it's current state is the identity and the consistency of identity of it's setting an beings. In Warhammer, the Chaos Gods all have names that sound like they belong to the same language. They also have clearly defined identities in terms of character, appearance and purpose. No such consistency exists within Exalted. To compare them to their most obvious counterparts, the Yozis have a lack of strong identity and an inconsistency in their nomenclature that plagues Exalted in general, expressed throughout the books concerning settings and supernatural beings, with a small number of exceptions. The names that the Yozis and their lesser selves have are conglomaration of Greek, Latin, eastern European and fictional words that have no discernable structure. They are a very good example of the language used in Exalted in general, similar to the places of the Blessed Isle, simply taken at whim from a variety of cultures and put together in a bland and meaningless way. To name several places on the Blessed Isle: Chanos (Greek) Arjuf (Arabic) Juche (Chinese) Meru (Japanese) as well as names from other cultures such as Pangu and Sdoia and descriptive English names such as Eagle's Launch. Hardly any culture in Creation or in supernatural realms achieves any sort of tangible cultural identity present in world cultures.
Exceptions to this rule (although far from convincing) are the Zalvenesh Divers (The North p. 94) Lookshy (Creation's strongest culture, tending towards but not successfully being very Japanese) the Lintha and the Fair Folk. The nation of Harbourhead has something resembling a proper culture.
Plagarism
To be a fantasy writer is essentially to be a ripoff artist. Tolkien based his work on existing material. The creators of Warhammer, differing from Exalted in a profound way, built their game on the exceptionally strong foundation of the races of the Tolkeinian universe and the geography of the world. This comes across as being rather thinly veiled and the creators do not take their work entirely seriously, throwing in jokes like calling out of the way places in Tilea (Italy) things like Cap A'Cino and Gorgon's Ola. The reason the game is creatively so successful is they had extremely strong (pre-existing) ideas on which to build and did a very good job of it. The Warhammer World is essencially a recreation of the world with the designers' stamp on it. The same could be said of the World of Darkness, deliberately made as an alternative version of the world we live in.
The problem is how do you successfully build a world outside this one. Many fantasy writers try to create their own realm which you can slightly snobbishly deride as bland and lacking the scale of the world of Exalted. But the question remains how to create a creatively strong fantasy world from scratch.
The answer seems to do the same as the creators of Warhammer did. How to do so differently is what distinguishes Exalted from basically the entirety of fantasy lore as we know it.
The first as already acknowledged is the rejected of Tolkeinian ideas, especially pertaining to what races inhabit this world (orcs, goblins, dwarves etc.) The second one is really critical and the designers have already touched upon it, although I'm not sure how aware they are. It's an absolutely stock concept in fantasy, so common that any attempt to deviate from it is hardly even conceived let alone conducted, that all fantasy games, films and books from Tolkien and Warhammer to movies like Shrek are made in the same cultural setting: namely Medieval western Europe. It's when you escape from this setting that's so well used it seems impossible to set a successful fantasy anywhere else, almost as if it's an unalterable part of our psyche, either by using a different time or a different place of both that much greater vistas of originality are opened up. A relationship between time and place is not absolute because where all standard fantasy in the middle ages focuses on north-western Europe (but not too far north, that would be exotic) if you turn back the clock to the ancient world, the obvious setting in Europe is the Hellenic and Roman world of the Mediterranean, on a faultline with the East in the form of Africa and Persia (cue Leonidas in the semifantasy 300.) In Mesoamerica it's possible to tap into a rich vein of civilisation during the middle ages. While in China things were about as civililsed during ancient times as the medieval period. It's possible to go back even further to ancient Egypt where they were building monuments four and a half thousand years ago.
In keeping with the game's tone of epic fantasy and humanity's lowly status at it's origins, one source of inspiration that's particularly relevent is Age of Empires where you take a stone age tribe and turn them into a world-shaping culture.
Fantasy or Sci Fi?
One of the most pointed questions for reshaping Exalted is what role technology should play. This is a question that cuts to the very heart of the game's theme. One aspect of this is the availability of artefacts. Naturally as returned Solars the players will have an increasing power to make artefacts of their own (given sufficient resources- the availability of which may depend on the favour of the gods.) As essential part of the concept of fantasy is that powerful artefacts (like the actual artefacts characters use) are ancient relics from the past (usually a much more sophisticated lost age.) Sound familiar? Whereas in a sci fi game (you could almost remodel Exalted to be genuine magiscifi like EXALTED!, a derivitive of BLAME!) availability of artefacts depends more on a character's ability to produce new ones. Or at least the means to produce new ones is (more) available. This also has implication on what artefacts themselves are and the nature of magitech. In it's current form magitech is quite sci fi orientated, with power armour suits and the need for conventional maintenance. The notion of such artefacts requiring mundane forms of maintenance has always been disagreeable to me. Another point worth mentioning here is that in written material given characters who use power armour such as Gunzosha Commandos are armed rather jarringly with mundane weapons such as plain metal axes. A radical departure from the mainstream theme of artefacts occurred to me when I was trying to think of an alternative to the existing idea of Warstriders. Instead of simply being clanking suits of metal they are pieces of magical materials that transform someone who attunes to them into a titan. This transformative idea became the core of my ideas on the magical materials, that this was the full realisatoin of their power. It also led to other ideas on elemental power. Other artefacts may not be able to shape a user but may have the properties of living things themselves. I had this idea when looking at a picture of a sword in the Warhammer Quest Roleplay Book that looked like a shark, as if it could bite someone.
The true significance of the magical materials and where they come from are concepts that still need to be hammered out. I personally don't have any conclusive ideas yet. The source of the magical materials to start with needs revising. I envisage the celestial materials as gifts from the Celestial Incarnae (hence their possible lack of current availability) and not simply mundane substances transformed through an alchemical process. Soutsteel especially I found very disappointing (such as the Charms in The Abyssals.) Jade is more complicated because it is part of a complex system involving elementals, manses and elemental power. Elementals in their current form I think are very boring. As are the powers of the Terrestrial Exalted. This is because in a standard fantasy scenario elemental power would be conveyed especially visually in very conventional fantasy terms involving orthodox images of dragons etc. Fortunately the designers avoided this powerful but utterly conventional idea. Unfortunately they haven't come up with anything better to replace it, still relying on the themes of the elements themselves. This made terrestrial power extremely boring. When doing research on ninjas to reinvent the Rangers of Lookshy as Shinobi I read lore about the ninjas being able to assume the forms of animals. This is the basis for an idea that the powers of elementals and the Terrestrials aren't based on the elements themselves but on the creatures that live in them. The Lunar Exalted have an extremely ill-fitting personality that seems to be more about Gaia who Luna is loyal to than to Luna herself. The character of the Lunars is woefully full of misconceived and mismatched ideas. When you put the Terrestrial Exalted in their place however things make a lot more sense. The elementals are at the bottom of the supernatural hierarchy, existing to protect the fabric of Creation in a way that sounds a lot like the official motivation of the Lunars.
Where does this leave the Lunars? Although Exalted has a role of being steroetype busting, the Lunars although they are not werewolves still have this archetypal, unoriginal role. Also they are alledgedly paragons of free will and yet are chained to the Solars in a way that is almost offensive when creating a Lunar character, as well as their task of social engineering, which sounds like it was just lifted from the Garou in Werewolf. The Lunars, and Luna herself, should have real independence. Luna is the Unconquered Sun's lover, not his slave. Neither are the Lunars slaves to the Solar Exalted. Where the Solars have to power to create perfection, the Lunars have the power to create (and understand) chaos because without chaos no Essence would flow into Creation.
The Floating World
I've been puzzling over the three dimentional aspect of the world for a long time. The Wyld exists beyond it's borders and Heaven exists above it. But what about below. Creation's Essence comes from the Wyld. It is literally built on top of it as part of it like an island floating in the sea.
Laying Down The Law
Firstly although it's a point of specifics where this is meant to be a sweeping description of differences between Second Edition and Version Three I want to say something about Essence and maximum trait levels. With the exception of strength and stamina which are determined by raw size, the limit of a character's traits up to a maximum of their Essence when their Essence exceeds five continues uniformly throughout all high Essence characters. This runs in opposition to the statistics in Glories of the Most High where The Unconquered Sun and other members of the Incarnae have traits exceeding their Essence rating. As being of Creation 10 is as far as they can go.
One practise which undermines the integrity of Exalted is the writers' on going tendency to contradict their own rules. Even going as far as to contradict the background for the game itself. For instance in the Compass of the North they suggest alternatives to the nature of the Bull of the North's Exaltation, even his status as Exalted giving free licence to storytellers to alter previously published material. How do they expect people to take the game seriously when they alter things at whim? This is part of a larger habit of using out of game writing to the detriment of the game as a whole.
Alchemicals and Authochthonia
This was I think the most well written of all the books on the Exalted and has great implications outside it's narrow universe.
The book itself raises issues about magitech and the state of technology in Exalted in general. There's always been a dichotomy of magic and technology in Exalted. I don't think this is done in a way the particularly benefits the game. Warhammer has examples of magitech (primarily the Skaven) but the magitech in Exalted is much more sci fi orientated. Mixing sci fi with mainstream Exalted isn't a good idea. It's too much of a clash of genres. The Alchemicals however polarise the issue. Because the nature of Autochthonia from the whole environment to the Charms powered by Authochthonian Essence are technological the desginers have built a world that's profoundly different, almost mutually exclusive to the rest of Exalted. I think the way they handled the Alchemical Charms and in some ways other aspects of the world of Autochthonia was excellent. Using hardcore sci fi was a possible alternative angle to Exalted people who haven't discovered this book could use, remaking Creation as a total technological world. Now that this book has been released that's not necessary. The important point is that the Alchemicals defines a technological view of Exalted and does it very well. Aside from a past sci fi, steam punk theme which I don't like personally and contradict the predominant theme of Authochthonia, the nature of Autochthonia is high sci fi. High sci fi, as opposed to past or present sci fi, is what you might call true sci fi where nigh on anything is possile. The most important part of the book for me was the picture at the end which shows Alchemicals fighting with amongst other things ray guns. It's reminiscent of a scene from a fifties era sci fi which, apart from the remake of The Day the Earth Stood Still, is perfect. What really strikes me about this picture is that apart from Stern Whip of Industry, it isn't like a primitive world with some science fiction over the top, but a genuine sci fi setting. The immediate implication is to apply this aesthetics completely to Authochthonia. Every single aspect of the world should be artificial. Rather than a dull and unimaginatively created world where a crossbow is relatively high tech, designers and players should really go bonkers. Totally artificial environments like the worlds of BLAME! and Necromunda are obvious models. Every aspect of the world and the technology in it should be futurised. Even Stern Whip of Industry's axe could be changed into a 'power axe' with Essence induction coils. Using something as primitive as a plain steel axe, certainly in the hands of a hero like him, would be totally archaic.
As for mainstream Exalted the same idea applies of using supernatural power as the basis for 'technology' which makes the medieval contraptions of most fantasy look totally primitive, rather than a medieval world with some magic functioning on top of it. Only in Creation and other dimentions it's mysticism and magical power rather than high technology.
Primal Rage
As impressive as that is, the greater implications of The Alchemicals changes the whole world of Exalted. If this isolated civilisation has a world based totally on technology, if Exalted is to be a truly high fantasy game, then Creation should be a world based totally on magic. Magic is the defining trait of fantasy. Without it it would be mere historical fiction, at most set in a different world. Considering how 'low' much fantasy is, it's little more than a touch of magical power sprinkled over the ubiquitous setting of the middle ages. The frequency this setting is used by fantasy writers is most depressing as if none of them had the imagination to set their story at any other time.
Exalted by it's nature is meant to be different. In a sense it's a fantasy game for people who don't like fantasy games. The answer to the issue of setting, and one that works very well with a Lovecraftian perspective on the Primordials as well as creation scope for a truly epic fantasy game, is to set the earliest stages of Exalted at a time when technology as such didn't exist. If you drag the beginning of human civilisation all the way back into prehistory, then the role of magic and the scale of the environment is transformed completely. The world becomes a collection of vast, primeval landscapes. one feature of this is to make the directions of Creation supernatural realms in their own right, albeit material ones. One alteration to the current design is that the Elemental Poles are featured and dominant geographical areas in their own right, sitting at the centre of each of the regions of Creation. Each Elemental Pole is the source of the Essence that each of the directions is based on. Similar to the way that Ulthuan is a vast, detailed geomantic nexus in Warhammer so are each of the Elemental Poles.
Creation or Reclamation?
Another facet of the difference between sci fi and fantasy is that in sci fi people invent new technology. In fantasy a characteristic trait of the genre is that people acquire relics from a lost golden age where magic has a power that is now lost. This is a feature present in both Warhammer and Exalted, in Warhammer the creation of vortex in Ulthuan on the Isle of the Dead halted the forces of Chaos at the cost of largely removing magic from the world. In Exalted it was the Usurpation of the Celestial Exalted (and possibly even the overthrow of the Primordials) that left the world devoid of the power to use Essence in the ways it had done. What does this amount to? The answer the game's creators have to this question has a strong bearing on artefact creation. The process of acquiring magical materials used in artefacts needs to be revised. The process of creating certain magical materials is underdeveloped (especially soulsteel). jade is simply mined out of the ground. This however is secondary although linked to the issue of whether artefacts should be created or rediscovered. If they are rediscovered such items should be irreplaceable. Admittedly I haven't yet come up with a proper concept for the creation of Jade and other magical materials and how they are linked to Essence, manses and how they are formed. These are some of the most profound questions creators of Exalted need to address. If jade artefacts are actually pieces of the Elemental Dragons that would make them unique and exceptionally powerful. Of course it would be frustrating to players if they were not allowed to create artefacts. One of the attractions of Exalted is the freedom that the players have as a result of their characters' power. Finally there is some distinction that needs to be made between artefacts and thaumaturgy. Thaumaturgical rituals (a better name than procedures) are expensive and should have effect worthy of their cost. Artefacts however are priceless and their effects should reflect this. They are the power of the Incarnae given form, such power does not merely give an advantage similar to mortal objects but the power to do something not even thaumaturgy is capable of.