My first impressions, take them as you will:
*The way you have everything set up here will require some major tweaking to the system you plan to use--if you're staying with either 4e or 3.5;
*For example, having several people in a group of differing levels will get difficult to manage. Nobody will be able to fight efficiently in the same encounter; the level 11 guy will kill everything in one hit, the level 3 guy won't be able to hit anything because his attack bonus won't be anywhere near the monster's AC, etc. You'll need to either re-write all the monster's mechanics, come up with a new combat system, or choose a different system entirely.
*Three magic items of the player's level plus three of up to three levels higher is rather unbalanced--the standard for starting characters is one magic item at level, one level +1, and one level -1, plus gold equal to one item of level -1. So a level four player will get magic items of level 3, 4, and 5, and 680 gold.
*No bookkeeping for ammunition/consumables is awesome. You'll want to watch consumables like health potions, though.
*Looks good! As I mentioned before, I think it's important to lay this out right from the start, so glad to see you're putting thought into it.
*The one question I had was about having no internal thoughts; do you mean internal dialogue? For example: I hope we find an inn soon, Rolan thought. This rain is interminable. Having such thoughts can be great for role play, because it allows players to vocalize things without having their characters do so. It adds flavour.
Or do you mean the player's thoughts? For example: "Hey guys, Rolan doesn't like the rain, so I'm just going to have him sulk for a bit until we find an inn." You're right in not including that, though such thoughts can always be put into [ooc][/ooc] or [spoiler][/spoiler] tags.
*I have to admit, I'm completely lost here. So a player doesn't roll initiative--but if his attack roll hits and the monster's doesn't, the player goes first? Does that happen every round?
*You have only d10s and d6s? What about attack damage? You'll need to house rule all the different weapons if you go this way, or figure out how to make one weapon better than another; having a great axe work mechanically the same as a dagger will break the game, as nobody will need to spend proficiency feats or increase their primary stats to get a good attack bonus.
*I like the idea of having a "special moment" when you roll a crit, though. Will this replace a critical hit, or add to it? From a cinematic perspective, it's a great idea!
*Being able to roll a skill to empower your attack in the same roll is a nice idea--I can see lots of creative potential there. how will rolling a skill affect the attack though? For example, say I roll Arcana to call upon the demons of the shadowfell to empower my Warlock's Curse. How does succeeding or failing that roll affect the attack? What if I don't roll it in the first place, is my attack any less powerful?
*If you're going to eliminate social rolls, you'll want to have some specific "rules" regarding social interaction. That is, how can one succeed in a social encounter, and how does one fail? If you don't lay this out, there could be a lot of argument--who's to say my prose wasn't skillful enough, and by what standards is it judged?
All in all, I can see you've put a great deal of thought into it, which is good--I commend you for the attention you've put to this. But, i think before going further you'll want to take a step back and look at the picture as a whole.
You're changing some of the most vital parts of the game system--if you're using 3.5 or 4e or any other d20 system, that is. You're changing, by my count:
*How skills are used/rolled, including eliminating some
*How leveling and advancement works
*How Hit Points--and by extension, healing--works. (i.e. if you've got hit points by level, Healing Surges are basically useless or arbitrary.)
*Stats for attacks, weapon damage, skill bonuses, etc as they pertain to dice used--i.e. everything is d10 or d6
*How initiative works
Now having some of these changes isn't too bad--lots of games here eliminate the need to track ammunition and certain consumables, for example, and leveling "by block" rather than by XP points gained per monster killed makes things a lot simpler. But changing all of this will--no offense--break the game. It's no longer a d20 system.
However--you may want to look into something like Fate. It's a narrative based system with simple rules, and is highly customizable. There's no reason you can't take the Sword and Sorcery themes and feel of D&D and play it using this system--and it will negate the need to make this many changes. Looking at what you want to do here, I think this is the way to go, if you're willing to learn a new system.
The drawback is that you may not get as much interest, as Fate games here aren't as popular as D&D. But if you 'sell' it as D&D Rules Lite or something like that, you might get around that.
Just my $0.02.