I'm both happy and disappointed to say that from a gameplay standpoint this is one of the best games I've played in quite awhile (dissapointed only because there's really no excuse for bigger budgets not to have better design).
I was worried about starting on Insanity as I thought that might require grinding, but instead I got a grind-free strategic, almost puzzle-like rpg.
Some great things:
1) No real Grinding. There's a fixed number of enemies in each area. There is an (unannounced) option to fight in an arena, but I skipped this and it was sufficient for 90% of the game (see below).
2) Fights are self-contained. Fixed HP and starting MP for each fight (modulo equipment/classes) means each battle can be thought of as an independent problem to solve.
3) Increasing enemy power. This forces you to fight efficiently and actually makes the game more fun by not only adding challenge, but by clearly directing players not to use slow grinding strategies that mostly consist of healing.
4) Well-balanced battles. (Mostly?) The lack of grinding and self-contained battles means the designers could tweak each battle for your party's capabilities. On Insanity this means battles that are regularly winnable with only one or two turns leeway - creating tension and occasionally forcing you rethink your strategy.
5) Brilliant class system. Worth it's own post. In short the classes were awesome, added strategic flexibity, interacted with eachother, felt unique, and interacted with the base stats of the characters granting even more diversity.
6) Strategy evolves with level. Thanks in part to the clever MP and class system leveling feels meaningful - the way you play at the beginning of the game and the way you play at the end is decidedly different due to qualitatively new options that open up in classes and a ramping of enemy difficulty that requires you to exploit them.
Real Problems (game is still Great, but...):
1) Opaque Damage. Unlike, for example, Breath of Death there was no indication of how much damage an ability would do to an enemy before you selected it. Given that you didn't know the enemies' stats, resistances, or even base damage in some cases this sometimes meant a lot of trial and error. MOST importantly it dissuades the use of new strategies because of the extra work.
2) No way to quit. This was a serious gripe on Insanity. A single wrong action could scuttle any hope of victory, but you're stuck playing through the whole battle. It's especially bad combined with problem #1 as trying a new strategy forced you to fight entire losing battles that you realize were lost from the first turn. -- This actually led me to drop difficulty to Hard for a little while (when I got to the bank), until things got monotanous and I jumped difficulty back up again.
That opaqueness is really unfortunate. Adding a new button that gives strategic players numeric info on an ability and/or enemy would really help.
Otherwise great game! Can't wait to see what the next installment brings. It would be nice if there were more diversity in enemy strategies -- hopefully they'll cook something up in that regard for Episode 4. (Which I can't wait for!)
All in all, beautifully designed game! =)
Other peoples thoughts on game design aspects and on playing through on Insanity or other difficulties specifically?