Thank you for your response!
I'm glad to hear that this is still being worked on.
Aside an error in the text I haven't found a single flaw that breaks the concept, I'm just missing an aggro feature. While it is always possible to just narratively handle aggro, I think aggro + combo features (break -> topple -> launch -> knockdown in the video game) would make health/damage tracking kind of obsolete or at least secondary. It would really give the players the power to control combat and feel badass by just describing the action, while the old standard is too much math and min-maxing at least for my players. I think you also have that in mind with this concept, right? For my game I will also simplify the range and movement system, while in your concept it is a lot simpler than say dnd 5e, I was thinking about shortening it further by just having them use movement to maneuver around the enemy. This probably only works in my head, because I plan having my players take only one or very few enemies on at a time.
I have already thought of a simplified concept of this ttrpg that I will try with a few friends. The whole math thing isn't the only reason. Some aren't familiar with XC2, which is why I want to only slightly introduce features... you could say I made it more XC1 like.
Regarding the Arts, I'm personally fine with that, since I would include aggro as a more centric feature in my game. I just don't know if that will work for a broader audience. It actually took me a while before understanding that potency increases the dice pool by +x (starting with 1). It confused me when it said it increases power and precision and then just says +1. I wasn't sure if it means that you always add a success to a roll with that art or you add one if at least one was a success... eventually I scrolled far enough to the example to figure out it means that it extends the dice pool. I kind of blame my reading comprehension here...
I definitely agree with your disinterest in HP. It's something I've been exploring doing away with for a while — my other project, Fate/Last Chance, has no HP at all, replacing it with an abstracted "battle tension" system to increase the same action-feel I think you're searching for. We made the choice to embrace HP and the grid in Blades of Ether on purpose, though; our goal is for the grid tactics feel to encourage partner and party cooperation in the moment to moment of battle.
I'd be very interested to hear what changes you implement and how they work out! If you hit on something really fun, it very well could become a rulebook adjustment.