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Although the guild wars skill mechanics were quite neat, I have to say I found the concept of 'equipping' a skill to be rather immersion breaking and frankly, weird. It completely destroyed all semblance of identity my character might have had.
Historically, skills were rings that you wore, which pseudomagically imbued you with the skill, or something. Thus, the eight skill limit (one for each finger, thumbs excluded). I agree the lack of justification within the context of the game world is a bit jarring, now, but I'd consider that a secondary concern or at least an issue orthogonal to that of balancing the game system.
Nowadays I tell myself that the skills are representative of how my character has prepared himself for his excursion (e.g., bringing trapping supplies, reagents for spells, and so on) in reasonable ways that are too micro-oriented for actual concrete representation in game play (I don't want to manage my arrows, or carry rocks to use to create meteor spells, whateever). So, I can only prepare myself for so much, and thus, the eight skill limit. But I digress.
Also note that I don't think you need to limit skills in the same was as GW does to also support arbitrary respec.
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So you are suggesting that instead of trying to stop a player from respecing purely to circumvent a challenge, I should balance the challenge differently and make the true challenge figuring out a good build to handle it? I like that.
Basically, yes.
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Of course that changes challenges from figuring out how to overcome inherent weaknesses to more of a logic puzzle as challenge via a weakness would simply be respeced to compensate for. IE, the fire mage facing a fire dragon is simply going to respect to be more effective, something I was avoiding.
One thing you can do is make creatures and encounters less one-dimensional. Yes, ice magic may work better on a fire demon, but how much better? Typical RPG cliche is do 1.5x or 2.0x damage. That's quite a lot. You could change that so you got a much smaller direct damage boost, so it's worth a players time to consider not bringing that ice spell -- finding a balance between giving the ice spell enough extra oomph to make it somewhat useful, but equally useful as (for example) spells to shut down the demon and prevent him from retaliating while you hit him with regular, non-damage-boosted spells.
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How do you create a challenge then where such respecing isnt as obvious or useful?
This is tricky, and something Guild Wars does poorly. It's usually impossible, on your first run, to know what kind of skills will be good for a certain area. You can extrapolate based on area similarity, usually, but that doesn't always work. Sometimes you just need to go in and get beat up a few times to see the kinds of encounters you'll be facing in an area, and then spec yourself to compensate. It's not what I'd call ideal.