No random encounters, a gambit system of sorts on your comrades, and a combo system that actually made sense (Swinging your sword up then back down was a perfect combo with no attack time delay, where as doing the attack where you slam your axe into the ground and trying to tie it into the attack that makes you spin the weapon in a circle takes about ten minutes, which it should.) and being able to pick a fight with any NPC in the game didn't hurt, either.
Good on paper, but in practice ended up boiling down to predefining the best combo you can and spamming the attack button on enemies while occasionally calling out for healing. Basically like Kingdom Hearts, only you trade the the ability to cast spells directly for the ability to play with your combo a little.
The .hack games were kinda fun - basically the exact same shit, but it flowed much better.
Always wanted to see another ORPG with PSO's deliberate combat pacing, but without the awkwardness.
I really enjoyed .hack's battle system; It played a little like PSO without the extremely easy to kite monsters. Very much a fan.
My favorite battle system would probably be Monster Hunter's, which was once described to me as 'like PSO'. I'm really not sure how they came to that conclusion. On the PS2, you move with one analog stick and attack with the other. Except the battle system is less revolved on the control scheme, and more what weapon you're using and the specific delay on your weapon, the sharpness of your weapon, the toughness of your opponent's armor, the part of the monster you're attacking, the amount of fatigue you have, and whether or not you're able to dodge the attacks of your enemy, which against the more powerful monsters, will also determine whether or not you die instantly when hit.
Seriously, though, you will shit yourself the first time you run in to fight a giant red dragon, hit them once, have your weapon bounce off with no effect, and then get pelted with a fireball for 90% of your health before you can recover enough to roll away. Monster hunter was a great game. Also: extremely fucking skill based.
Also, traps, stun grenades, explosive barrels, and leading dragons into traps surrounded by explosive barrels.
Yeah, Legend of Legaia and the Tales of series both struck me as games that did what Xenogears wanted to do, only better: The former in a martial arts sense, like you said, and the latter in a real-time combo-y, brawl-y sense.
The problem I had with legend of legaia, is that I got the vibe that they made battles delibrately take longer than they should have just to show off the batlte system. After five hours of this battles became painful; I literally found myself in tears I was so frustrated at this game. I eventually just gave up.