Not an "Action RPG" per-say, but the game will have action elements. Over all, we want the encounters to be fairly fast-paced. A well-built character should not need to spend several minutes beating down a trash mob in order to advance. This is where the use of combo and effect-kills comes in; stronger enemies(bosses) will be immune to these, but weaker mobs should be relatively easy to deal with.
The idea here is to draw a line between "being hit" and actual injury. Consider you're in a fight; if you get punched in the stomach, you'll be hurt, but if you've had a few minutes to catch your breath, it's like it never happened. Whereas if you get stabbed in the stomach, that's a very serious thing.
So characters have two pools of hit-points: "Constitution"(hit points) and "Toughness". Toughness is the "punch to the gut" type. It recovers faster and regenerates automatically; most attacks deal damage to, and things like armor and whatnot help mitigate that. "Constitution" implies actual injury was received. This can only be recovered either through medicine(sutcher kits, bandages) or with the use of magic. There will also be an "injured" condition which causes both to tick down during strenuous fighting until removed.
Let's further add a "Fatigue" function. This is really more of a measure of how much effort your character is exerting at any given time(E.G. climbing up stairs requires more effort than walking on level ground). When your character is at full health and uninjured, fatigue is basically meaningless. However if you're under the effects of an injury, this determines when you take additional damage. Further, some abilities/combo effects will automatically leave you "fatigued" and require some time to recover.
Combat should be real-time but relatively slow. It should not require cutting-edge reflexes to play this game. I personally dislike any sort of parry/active blocking system and prefer a good old fashioned "aim at monster, hit attack button". That said, some kind of grapple/boss climbing feature should be at least attempted.
A good old-fashioned FPS-style interface with hotbars. It's not in vogue but who cares? It's solid and simple. Hot keys are tied to special abilities, special attacks, etc. Keep the basic tab to target, left-mouse click to basic-attack. There is absolutely nothing wrong with this tried and true system.
Under the hood, we need some kind of to-hit and damage calculations, but will come to that later.
Each class will have a series of special "moves" or abilities which can then be chained into combos. A successfully executed combo has the chance to be instantly fatal to the target.
In normal combat, an enemy dies when it's hit points reach zero. An "effect kill" is the exception. A mob could be at full HP and still succumb to immediate death from this. It could be an injury that becomes fatal(see Injuries bellow) or the coupe-de-gras of a combo. Spells can also have kill-effects.
The idea is to keep the game moving. When it comes to clearing "trash", players should not have to spend a ton of time beating things down. Game difficulty should never be decided by "the number of hit points" a mob has.
There needs to be some system to determine whether or not the kill is successful. This could be as simple as a ranking system(EG enemies in group "A" are vulnerable, those in group "B" are not) or we could make some kind of variable.
Personally, I like the notion of dividing mobs into three categories: Captains, Lieutenants, and trash. Trash mobs are always vulnerable to effect-kills, lieutenants call for some kind of check, and captains are immune.
As covered under hit points, there are a few different types of hit points, and different damage types affect them. Your basic damage types are:
Unless a target is armored, slashing and piercing damage hit points directly. Bludgeoning damages toughness first but deals more damage once it has been removed. Magic has a target and will deal according to the spell or effect.
Armor provides enormous bonuses to toughness, and makes it so that slashing and piercing damage has to go through toughness before impacting actual HP. However, not all classes can inherently wear armor. Mages, in particular, have to jump through quite a few "hoops" in order to become armored spellcasters.
Injuries are funny things. They don't always happen, but any time damage is dealt directly to the hit points, there's a chance of inflicting an injury. This is where Fatigue comes into play, as injured characters suffer more damage when they exceed a certain fatigue threshold.
We will further divide the body into four areas that can be injured: head, torso, arms, and legs. An injury to the legs reduces movement speed, an injury to the arm reduces attack speed, and an injury to the head reduces both. Injury to the torso has the possibility of causing an instant fatality.
Whenever an attack is landed, the game will determine which area it hits. Blunt injury to the head, piercing/slashing damage to the torso have the chance(which can be improved) to be instantly fatal(this goes for both mobs and players). Magic cannot inherently cause injury or death, but some spells will have that effect.
You have three basic ways of defending yourself: armor/toughness, evasion/avoiding attacks, and simply not being a target at all. The third one is the hardest, as it doesn't help with AOE, but hey. Obviously, each class has it's innate specialties. Warriors rely on armor, thieves rely on evasiveness, and mages cower in a corner and hope no one sees them. Each class further has an Expertise tree that helps it overcome it's deficiencies in that regard. So warriors can chose to sacrifice offense to gain better defense, and mages can learn defensive spells at the cost of damage-dealing abilities.