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1. What sort of system should I use, or should I just go with something very light like The Window? I'm open to suggestions certainly. As far as generic systems go, I'm not terribly into FATE Core or GURPS, although Fate Accelerated or Savage Worlds are certainly a possibility. I'm also willing to do some light homebrew, or even mostly freeform.
This might be a good fit for good old World of Darkness core. Although I'm not super familiar with its most current incarnation, I know that NWoD manages to be rules light and narrative focused, and lends itself well to having things and powers layered on top of it.
It's definitely not a great simulationist system if you want to have any kind of tactical combat (IMO, it gets worse the more you roll and/or rely on turn-by-turn actions), but it does a decent job at giving you tools to handle narrative task resolution without being ultra-light like The Window (whose entire point is to be ultra-light).
Fate might be a decent fit, but you might end up with a big ol' pile of Aspects for a game like this, when you're trying to reflect characters with two different and distinct halves. It's also a bit fiddly to handle Fate points in PbP in my brief experience with it.
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2. Should I stick with High School? I think that it brings a sort of fun youthful energy to the game concept, and the fact that kids are coming to grasp with new mystical identities while growing up is a clear thematic link between the mundane and supernatural sides of the game. That being said, something like college could provide a little more freedom, although I'm not sure. I kind of like the idea of a more constrained setting, so centering around a school or maybe a small town would be best.
I personally agree that high school characters are kind of the most compelling version of this narrative, because of the strong coming-of-age themes and the potential to deal with issues way over their heads. The strictures of life are more difficult in high school.
An issue I run into (it may be specific to the games I've played), is that a lot of people play 80s high school movie characters - that is, 25-30 year olds dressed very badly - rather than characters who are high school students. People mature at different rates, sure, but finding buy-in for the strange awkwardness of high school can be hard.
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3. Should I base the heroic reincarnations off of Real Life Mythology? On the one hand it provides a useful base for the players, on the other hand it also means that the mystery of what one is will be gone as soon as I involve any really important part of their legend.
This is a hard one. On the one hand, if you build up your own world mythos, you have a lot of freedom to do your own thing. On the other hand, you can lose an essential hook - a player's ability to see and recognize and "figure out" their mythic ties.
One of the worst-kept secrets in gaming is that almost no player gives a crap about the DM's campaign setting. If you do go with your own mythology, you'll have to make sure to tie it to recognizable archetypes and tropes. If you don't, you'll have to exposit on the necessary fiction, which will ironically make the reveal even less mysterious, as you have to broadcast the necessary information that a player could otherwise infer from institutional knowledge.
You could split the difference - applying fantasy archetypes and tropes to mythical or other-fictional creatures and people.
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4. Any other concerns I should be aware of?
Establishing the tone early is going to be very important. Scenes in school might be important, but the classroom probably isn't.
Most importantly, imo, getting the characters to interact in a school setting (especially if you get very diverse characters) is going to take a potentially mind-bending contrivance or some kind of premeditation (for instance, everyone
has to be in the school play, or everyone has to be on the track team) that will require buy-in from the players. This should be part of the RTJ (Why are you involved with this thing/group/project?) Being too loose or open with character generation could result in characters that effectively never meet and don't have any common axis to get along, or even interact.