Slicedpeaches;
Each item has a range of possible stats, from poor up to some maximum. Each stat is given some value by the game, and however stats are chosen, the total value is limited (though it can still produce items well below the limit). For example, the highest damage range for one handed swords that are consistently in the game is 71-100 (dropped or purchased swords can be a little better). Reloading a particular sword, when the damage range is maximized there will tend to be fewer bonuses (there may be 1 or possibly 2 skill bonuses, for example, while a lower damage range sword could have 3 or possibly 4).
In a game trying for the lowest possible character level finish, Areana entered the castle about level 5, cleared the council hall about level 6, eventually doing the blessing ceremony at level 12, to end up in the wastelands at level 17. She tried the holy item quest at level 5, hoping to get a Frost sword, but gave up reloading after a fair bit of time. Coming back to this quest around level 8 or 10, she found it much easier to get acceptable stats on the holy sword (though she didn't get Frost).
I would guess this type of item generation has been done before, but I don't know who was first. AFAIR early computer and console games tended to have set items, and certain shops carried certain items, so you had to reach new towns to get better weapons. With PnP role playing games, the human DM was free to tweak whatever they wanted to, so when computer games first started randomizing stuff, there was at least the tradition of introducing some bias to keep gameplay fun and/or challenging.
I raised Identify as required (based on what I was finding, doing the beginning first), and didn't run into too many items I couldn't identify myself. You can get one level of Identify as a quest reward in Ars Magicana.
Maxing Identify early should not negatively effect the game. I'm not sure if
iZakaroN's SaveEditor (or from
Kiya's site, with description) can give you a skill higher than your character level merits, though.
I think in the latest game version most or all essential NPCs are protected from dying. Generically named NPCs should be relatively safe to kill. There are some named NPCs that are not required after the quest they are involved in.
If you use an area effect spell that does not need a target (such as Poison Cloud) cast near, but not directly on, and NPC, you can do damage and kill them without turning them hostile and without loosing any reputation.
If you take out someone you find that you need, it may be possible to bring them back (see
Reviving dead NPCs). If you attack an NPC directly, though, they will remain hostile if restored this way.
Smashy;
Before Areana did a lot of reloading for the same item in the same game at two different levels, a few people noticed the possible character level correlation. However, even at the same character level, different games can have worse or better item drops, so there was no way to be sure if was just random chance (plus it is hard to remember with great detail what stats you got in a previous game for a bunch of equipment).
I know this isn't why you are skipping the dragon breastplate upgrade, you can buy back the original if you don't like the new stats (or just because you can).
The holy amulet is potentially one of the best in the game.
The quest to meet Zandalor at the inn will always fail. I'm not sure if anyone has tried it, but I can not imagine not getting the quest will have any negative effect on the main plot.
