The core thinking behind the premise is simple: taking the piss out of taking the piss out of fantasy. I took a fairly standard "self-aware" fantasy setting--the kind you see a lot in fantasy anime like Slayers and the like, where the world is casually accepting of the inherent absurdity of its genre tropes--and spun it back the other direction, asking, "What could actually make this sort of situation possible and logical?" The goal being to end up with a fantasy setting where dime-a-dozen, down-on-their-luck "heroes" just trying to make a buck can hunt monsters, explore dungeons, and fight evil... while still being sort of social outcasts and never quite hitting it big.
Basically, the setting needs adventurers--they're the only ones, in a practical sense, who can deal with monsters, necromancers, and the like--but it doesn't particularly like them. The adventurers of the setting are outsiders by nature, largely unwelcome and unwanted in polite society outside of the useful functions they perform. As a result, they are less heroes than heroic mercenaries, treasure hunters, and the odd well-meaning vagabond; the majority of them are in it for the coin, or simply because there's no other job they can do given their "condition", not out of pure altruism or happenstance.
I'm still on the fence as to whether I want a female-only adventuring party. It would certainly simplify things in a lot of ways. I'll hear suggestions to the contrary out, but given the tone I'm shooting for here, it's quite likely that it will end up going that way.
The Reader's Digest Version:
The entire world is nothing more than a dream. The man on the street knows this, at least in an academic sense; it may have little effect on the way he leads his day-to-day life, but somewhere underneath it all he understands that the world around him--all his toils and aspirations, everything he knows and sees--is an ephemeral fiction of the divine. That is why he is special: he, himself, has dreams. Long ago when the gods first created the Dreaming Races--humans, elves, dwarves, and the like--it was this fact that made them special and unique. This was what permitted them to alter the world to their liking and live upon it as godlike figures themselves, masters of their universe.
The gods had erred in their creation, however: while humans had one gift the gods themselves could never match--that of generativity, the power to give rise to things equal or greater than themselves, whereas the gods could only craft things so much the lesser--the thing that made them dream, that shard of divinity, was purely of their creator's invention. Like all things of the gods, it could not be multiplied, only diminished--reduced to ever smaller portions to be divided up amongst those who came after. Thus it was with time that the children of the gods--and in particular men, who were most prolific and numerous--grew further and further from their dreams, until they came to accept the world dreamed up for them as the only one they could inhabit.
There were dark times to follow. Many men could not accept that they had been removed so far from their nature as dreamers; in particular, they found it galling that while the dreams of their forefathers could last forever, they were crude things born of a tired reality that could only hope to wither and die with time. They sought the power to dream in the only place they imagined it could still remain: in dark places, in forbidden secrets and hidden horrors. Though they could not find the forgotten shards of their divinity, there was something else they found in the darkness that they brought with them: the Nightmare.
For a time, the world became a very dark place. Those infatuated with the power of nightmares warped it to their liking. A great many of them even had the audacity to declare themselves gods of this dark world, lording over the vast throngs of humanity who had come to accept the helpless, mundane nature of their dreamless lives. They quarreled amongst themselves, and in the wake of their nightmarish wars empires were left to dust. The terrifying things lurking within the nightmare were set free to roam the world, preying upon the weak and helpless people who could not even dream up a sanctuary from the horrors.
Amidst this, a human came to Awaken. They could not say as to what her name was, as she was said to never have spoken in all her days, but she possessed in her calm demeanor a power that terrified even the nightmare things: with but her presence she could banish any trace of the unreal, cleansing the world where she walked of the nightmare... and the dream, as well. The humans who had for so long lived in terror of the dark powers flocked to her as a prophet, and though she did not speak to claim divinity or pass on wisdom, sought to emulate her in all things so that they, too, might burn away the shadows that plagued them. After she died, their adoration turned to worship, and soon throughout the land came the call for humans to pursue the Awakening and deny all things dreamed up by the darkness.
An empire rose from the faithful, a grand crusade to cast back the veil of shadows and reclaim the world for the unfortunate dreamless. They succeeded, to a degree; they pushed back the borders of nightmare-plagued lands to create for themselves a vast territory in which neither dream nor nightmare held sway. There, within the protective bulwark of their civilization, all things unreal were to be abandoned and abolished, evicted to beyond the periphery of their great empire.
But out at the edges of the frontier, the dark things still exist. No artifice of mortal men can hope to defeat them, and no prophet waits in the wings to banish the shadows back to their dark dens. Here, on the border of the empire, people rely on those who wield nightmarish power themselves to fend off the darker things lurking beyond the limits of the light. The priestesses may preach against it, and they may find their "saviors" nearly as unnerving as the fiends that menace them, but the simple reality here is that it takes a monster to defeat a monster...
Basically, in this setting to have character class levels you must have a supernatural power source (yes, even if you are a Martial-type character). Despite what common people may believe, not all adventurers rely on Nightmare power--there are a rare few, mostly among non-human races, who still have a strong enough shard of the Dream to call upon it--but the xenophobic teachings of the Empire demand that they shun all things supernatural just the same. This, of course, includes an often very intolerant attitude toward non-humans and foreigners from far-flung lands where they still practice "idolatry" of nightmare-gods and other such blasphemies...
Adventurers in the setting are generally disliked or even outright hated, but people need them. First and foremost, they are the only ones who can really stand up to most monsters. An Awakened priestess certainly could, but the truth of the matter is that only a tiny fraction of the Empire's clergy are actually Awakened in the slightest; the majority of them are just mundane supplicants who have absolutely no capacity to stand up to the supernatural. Beyond that, adventurers are often valuable as spies, assassins, and mercenaries, especially in the smaller kingdoms beyond the reach of the empire; after all, their abilities are outright superhuman, and if your enemy is using them what choice do you have but to respond in kind?
Nightmare power--also known as Diabolism or Black Magic--occurs naturally in some individuals, especially if they are exposed to it at a young age. There are some races (such as Tieflings) where it occurs almost unavoidably. Dream power--also known as Lucidity or White Magic--similarly occurs (much more rarely) by nature in some individuals, with certain races (such as Eladrin) having a higher proportion of it. These powers can also be pursued, however: a wizard can learn to wield Nightmare powers by studying the way such things work and unraveling its mysteries, while a warlock can make a pact with otherworldly entities to gain his powers. Awakened power--often referred to as Divinity by the faithful--the rarest of the three, tends to be "achieved" rather than come upon naturally.
A few notes:
*Because magic items are exceedingly rare in the setting, PCs will not have many (if any) by default. However, because the availability of magic items is figured into the way the game is balanced, you will still be able to select a number of benefits essentially identical to an equal value of magic items on each level-up. These are supernatural powers your character has.
*The above also means you can't spend gold on new items, which is pretty important since we're going for more of a down-on-their-luck adventurers theme. You wouldn't have much money anyway, it'd be unfair if you didn't have any gold to spend on magic items!
*A character's power source, regardless of class, is generally defined as being either Dream, Nightmare, or Awakening. Virtually every class can use every available power source. For the most part, power source does not have an impact on what options are available to a character. (The exception being that a warlock's power source is defined by his or her pact type.)
*I'm probably going to go with a lot of "rules shorthand" to speed up online play. For example, we'll probably use narrative rather than an actual battle grid. I know this takes away a bit from the tactical nature of the game, but running a proper grid seems to slow down play too much to be practical.
*Primarily we'll be using core races and classes. There will be a few setting-specific races though they will use stats largely identical to those of core races.