[color:"orange"]we could maybe flesh out those things (what would need to be done) you up for it?[/color]

Perhaps. Most general AI requirements are 'obvious' though, and the details of design would depend on a lot of stuff about Larian's next game we do not know.

Some rough comments follow (it is very late here <img src="/ubbthreads/images/graemlins/sleepey.gif" alt="" /> ) on the minimum requirements for a relatively good/flexible system.

Ranged characters
- need to be able to retreat from direct confrontation, when terrain, stamina or enemy numbers allow
- should only target nearby opponents, or (perhaps better) those already being attacked by another character. Attacking strong opponents that have not noticed you yet can be a bad thing, so there should either be a range limit for automatic attacks, or one based on the strength and numbers of opponents.

Melee characters
- in addition to the usual defensive / normal / aggressive modes, it would be nice to be able to assign characters to protect other party members (either specific characters or anyone in trouble)

- settings to attack the nearest / weakest / strongest opponent, to only attack an enemy already under attack or follow another character's lead
- position settings, to stay up frond, stay back, provide support where needed, run away at the slightest sign of danger...
- settings for when to use potions or healing spells, or call for help

Magic is the most complicated, and the hardest to do well.
- Without a spell that does physical damage (or something else generally effective against most opponents), a mage would need to switch spell types based on the opponent.
- In order to avoid wasting mana, a mage would also have to change the strength of spells used, or even switch to a bow, etc for weak opponents.

There is a further complication in that where you are in the game determines how free you are with mana usage, which is something the game's AI can not take into account. If you know there is a tough fight ahead, you may not want to use any mana at all with a mid-strength opponent, but if you are almost back to town and don't want any delays, you might want to blast weaker opponents with a strong spell to finish them off faster.

[color:"orange"]i'm open to the idea of 'pre-generated' characters IF they can level up and develop also.[/color]

I thought you were promoting pre-generated characters with your comments on party AI (individual objectives, weapon preferences, etc). I suppose backgrounds or personalities could be selectable when creating a character, or based on character class, etc (with certain restrictions). Any romances or individual specific quests would have to be pre-done, even if you could customize the character at the start of the game or modify behaviour (weapon training, skills, etc) during.

Whether you start off with a custom character or have to find pre-generated characters in the game to join your party, they would have to level and develop.

[color:"orange"]never heard of it.[/color]

LED Wars is Larian's RTS game, that you gave the backhanded compliment to above.