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There is the nice implication that equipment limits are set and defined by the ability of the player to maintain it rather than a level cap. I personally keep two sets types of equipment, one is base set, the gear I use for all my regular adventuring and stuff, and a fully decked out end game set that I use when I feel like I'm not strong enough to handle something or I need the battle to end ASAP.
I'm gonna put forth a theory that would help the immersion feeling but also reconcile with game play. Basically, all millitians are part of a hive mind of some kind, much like how the elves are connect by the memory tower. We can share knowledge and experiences, but still retain our individualities. Here's how it works, basically, the latest Generation the game is on is the "present" and anyone doing the older generations are reliving past events. This would explain why the Milltian chooses and does specific actions independent of the player sometimes. Our failures and successes are pre-determined for the story, however, if we assume that the story Milltian isn't actually the character we're playing as, but a separate entity entirely that we're seeing the memories of. In the Alchemist generation the elves and giants have ended their war with each other, and are represented by the races opening their borders more, this would explain why the guards don't attack, but the NPCs still say they do, you exist in the present, but are reliving memories past. This would also explain the simplification and merging of the elf and giant stories into Chapter 1, the collective Millitian race would have been around for centuries from their perspective, these events from such an earlier point would become faded, and details lost. This would also explain why even though the Millitian is said to hold "world changing powers" but we can't do anything with it besides a few cutscenes, because the players don't have this power, the one whose memories we're living through is the only one to have access to its full power. We're simply sharing a portion of it. But that's just how I choose to see things when I want to immerse myself in the lore. What do you think?
For those interested on top of the exp camping penalties imposed when hunting out in overworld, you also get an "item" penalty. This is most apparent when hunting for Emerald cores, and Shyllien animal parts as the more you kill, the lower the drop count becomes until it simply stops dropping. As for posting the rates of item drop rates, well its an MMO, its more meat for the meat grinder and they do sell that nifty 2x drop rate pot in the cash shop and they do provide the VIP service... (They want your money)
Strictly speaking Eweca isn't the only source of mana in Erinn. Mana is everywhere in Erinn however, some places, objects and bodies have more mana than others. Mana tunnels are powered by the mana of the sun, Palala. If you're willing to dig around, it mentions that in ancient times, the levels of mana far exceeds that is seen in current days, mana was dense enough that enchantments could free transfer from one object to another and could do so without any outside forces influencing it. It is also said that when the mana density started dropping that enchantments had no choice but to stay fixed and reside objects permanently. For some context, enchantments operate by consuming the mana of the object it resides in (mana resides in literally everything in Erinn, air, soil, people, etc) to active its effects. The reason why enchantment scrolls expire is because the paper the enchantment is residing on does not have the mana to sustain the enchantment forever, so when the scroll expires, the enchantment "dies". In short mana exists as part of the world as oxygen does, you can concentrate it, consume it, or remove it.
There are multiple approaches to soloing Phantasm and its entirely dependent on your play style and resources. There are videos of elves soloing phantasm using only puppet and alchemy, human players doing it without reforges, etc. Phantasm can be solo'd through experience and proper preparation that makes use of your strengths.