I personally enjoyed the combat system in Shadow Hearts Covenant. It was an active turn-based battle system like in the FF games, but introduced what I felt was a highly innovative "fate wheel" that required players to hit certain areas on a spinning wheel to do more powerful attacks or to extend them. This wheel could be modified using items or customized depending on the preference of the player. It added an arcade feel to the otherwise traditional battles and required the player to remain focused and involved during fights rather than madly pressing the "Attack" option in the menu.

Xenogears for the PS1 also gets my vote for a terrific combat system. While on foot and not in Mechs, the player hit different buttons for different types of attack, like in a Street Fighter title; triangle for kick, circle for punch, etc. These could be strung into combos and more interestly, your characters were not restricted to one side of the screen. The battle field was active and dynamic, allowing characters to remain where they ended up after an attack or being hit.

Turn-based battles aren't bad design in themselves. Creating situations where at higher levels all a player has to do to win battles is tap 'X' repeatedly without looking at the screen is.

I think one of the reasons that turn-based RPGs are considered to be the tradional RPG is because Action RPGs and Real-Time RPGs are sometimes classified under the genre Adventure. We could debate the whole RPG classification thing for hours and not come up with any conclusions, but the turn-based battle system is one of the things that can distinguish a RPG from an Adventure game.

Was the first Zelda on the NES an Action RPG or Adventure game (rhetorical quetion). Some have classified it as an Action RPG or Adventure/RPG (the second term now being redundant). Still others have classified it as an Adventure game alone.

One mistake I think people make is to try to develop a battle system that is entirely original. If a game developer tries to avoid games such as Final Fantasy in every way, only wanting to re-invent the wheel, they will probably come out with the exact opposite of these games -- a battle system that is poorly-made, boring, etc. Commercial game developers don't have the guts to completely avoid the original concepts of battle systems for RPGs, because these concepts are what helped the RPG genre to become a hit, and turning against these may create a game so different that it will not appeal to fans of such games as Final Fantasy.

Rather than trying to completely re-create the concepts of battles in the RPG sub-genres, I think that people need to focus on perfecting a solid system for battles. Nothing is completely original; there were platform games before Mario, and there was Adventure on the Atari 2600 before Zelda ^_^.