IC: modern/urban fantasy, writing intensive, likely adult
I've also played a few games where normal people are taking to handsy setting, but blending the two together has never really come up. I imagine that while the world physically changes Sowood what we have in our belongings. Suddenly that heavy coat in the winter becomes some suit of armor, and you are favorite kitchen knife becomes a long sword. Add some extra urban elements to it, some conversion to subways into buildings, the city Park is suddenly a massive forest in the middle of the kingdom, that kind of stuff.
As for a rules system, I've never been good with keeping up on them so I tend to lean towards freeform. Managing the writing and creative process is far more interesting to me, but a light rules set could work. the only one I really have experience with is the Window.
A lot of this comes back to a story I wrote sometime ago about people suddenly waking up in a foreign land, and their goal is to journey to this sacred mountain. When they reach it, they can return to their former life, but along the way they begin developing traits of this new world , and at the end they ultimately make a choice of staying in his fantastic place or returning to their old life.
So to that end, the story would be about the initial shock of waking up in this world followed by a gradual but sometimes rocky transition to becoming fit for the new one.
the randomness element of it would be something along the lines of, maybe eight races, a few "classes", access to magic, available equipment, that kind of thing. Everybody would have to roll, but you would get a few reroll if you don't like the results, and you also can pick one or two categories that are entirely up to your choosing. Having a curveball thrown at you was fun, but playing something you have zero interest in or doesn't fit your character is not.