I don't understand the radius suggestion. The whole world should pause. Then, all within sight range of the combatants should be included in initiative/combat. So, you walk into Moonhaven. You trigger the fight with the goblins on the building. All goblins in range of the PCs and the goblins who can see the PCs should be triggered for combat; thus simulating that the goblins can even call in others close by to help them kill you. They've already got their little sight range bubble things. These could be used for combat purposes. However, since none of those NOT in combat aren't moving, they can't just accidentally wander into the fight while you are attacking those in combat with you. However, if you and/or those goblins in the fight move too close to other, frozen, NPC's, they get triggered to join the fight. So, if while you are trying to skirt around some of the buildings, you run into Lump and his 2 ogre buddies, wandering into their line of sight, you would pull them into the fight. Otherwise, they stay out of it and are simply frozen in time. Same with the goblins on the south side of Moonhaven or the bugbear asleep on the north side of the blacksmith's shop. Unless combatants draw them into the fight, they simply stay frozen.

Why would that be so hard? I would actually think that would be easier to program and implement. Nothing moves unless it is drawn into the fight.

Now, for multiplayer, even if a player is off in lala land far away from another, if one player is drawn into combat, the other is also regardless of distance. This might be frustrating to the players, but ultimately aren't they supposed to be playing the game together anyway? Shouldn't they be relatively close together anyway? And if they aren't, then it still makes the most sense that the player far away from the fight only gets to move one round at a time so they aren't Fast Traveling from the Risen Road to Ethel's lair deep underground all within one round of combat between one player and his/her team and Ethel. If they split up, they should not be able to gimmick the game and have one player speed across the board to help rescue the one who got into a major fight without them.

Well, that's the way I see it, anyway.