Heh, heh. Please don't call her "Our" either, because that confuses the heck out of me most of the time (I keep thinking you are saying 'our' as in the possessive noun.)
Okay, the arc system. (I'm going to add this to the Lost Souls Handbook later for future reference.)
I developed the arc system years back during my old chat-games and it's worked for me pretty well so far. (This is the first time I've used it in a forum-game, though.)
Prior, two minor (but often annoying) problems would crop up in my games. First, as time passed, old players would quit, new players would join, old characters would die, new characters would be rolled up. Such is the way of things. But given enough time, sometimes the original party would be mostly or even entirely replaced. This would cause issues with plotlines. Maybe the original party was gung-ho about tracking down the vile Lord Blackguard and avenging the village he burned down. But the new party would have little reason to care about that. Consequently, trying to run an epic adventure would be difficult. Often games would fall apart in the middle, as the plotlines would no longer be relevant and the players wouldn't care anymore.
A second problem was in-game time. It's common for PCs to start their career very young (most PCs are between the age of 16 and 19), which is fine. But often they would go from level 1 to level 7 in the span of a few months in-game time (in real time, of course, it took much longer). Back then, downtime between adventures was only just long enough to train and resupply, so usually a couple of weeks, tops. It seemed that adventurers would live exciting, dangerous lives for half a year or so, then retire and settle down at the tender age of 17 with their massive wealth after saving the world.
Hence the arc system. The way it works is that the game is split into several arcs (seven actually, although we've never made it past fourth). Each arc is more or less self-contained. If a game is failing or falling apart, the end of an arc is usually good enough to serve as the end of the game, allowing some closure.
Arcs follow the progress of the PCs as adventurers from apprentices, journeymen, masters, lords, heroes, myths and finally gods. Arcs end when the party reaches a certain level of experience. Arcs are always followed by downtime that equals half of the party's general level in years. When a new arc begins, the party is reunited (either by choice or by fate) and begin their adventures anew. Each arc usually has a theme and will generally ask a question. Arcs help serve to flesh out the PCs and help them feel more part of the world itself.
This is especially true in the downtime. While the downtime is mostly elapsed, it helps ground the character as real people. What do they do in the years between adventures? Stay with family? Train and study at the local academy/church/guild? Do they own property to stay at? Do they have regular jobs when they aren't adventuring? After each arc, the DM and the players hash out what is done during the downtime.
The arcs are as follows:
Arc 1 (Apprentices): This arc begins at 1st level and ends when the party reaches 3rd level (or close enough to it). The downtime after the arc lasts about a year to a year and a half. This arc serves to introduce the PCs to each other and to the world. The question asked is 'Who are you?' This is where players figure out who their PCs are and get settled into their roles. It's common for players to write a character a certain way, but then once they are put into action, take an entirely different path altogether. Alignments and personalities are often retooled in this arc (and indeed, alignment change is allowed without penalty in this arc) as the players get used to their characters and each other.
Arc 2 (Journeymen): This arc begins at 3rd level and ends when the party reaches around 6th level. The downtime after this arc lasts about three years or so. The question asked is, 'Who were you?' This is the arc where player backstory most often comes into play. The first arc is made up pretty randomly, but the second arc is custom built for the PCs. Any plot hooks in your backstory are likely to be harvested for plotlines. Of course, some players deliberately avoid putting any hooks in their backstories; they murder their family, burn down their home town, and make sure there are no ties whatsoever to the past or to this setting. Players sometimes turn in backstories so vague that they may as well have been blank (I grew up in a nameless town that no longer exists. My parents were killed by an unknown monster. I decided to pick up a sword/spellbook/lockpick/holy icon/etc. and become an adventurer! -- No joke, that is the most common backstory I get from most PCs). Well, that's fine then. Just don't get upset when you get little to no spotlight!
Arc 3 (Masters): This arc begins at 6th level and ends when the party reaches around 8th level. The downtime after this arc usually lasts around four years. If the first arc asks 'Who are you?' and the second arc asks 'Who were you?' then the third arc asks, "Who will you become?' This is the arc that tests the character and their flaws. Their convictions are tested, their flaws are picked at, their preconceived notions are challenged. How do they react? Do they grow and change or not? Do they bend--even break? Just so it's understood, my goal here isn't to change the PCs, just observe how they respond to these kinds of things. Whether they change or not is up to the players themselves.
Arc 4 (Lords): This arc begins at 8th level and ends around 10th level. The downtime after this lasts about five years. The question asked here is, 'What place do you have in the world?' This is the point where the game starts to shift gears from dungeon-crawling and exploration to micromanaging and worldbuilding. PCs become lords by building strongholds and attracting followers. They start hobnobbing with monarchs, high priests, archmagi and the like. They begin to gain the power to influence the world around them on a much larger scale.
Arc 5 (Heroes): This arc begins at 10th level and ends at around 13th level. The downtime lasts around six to six and a half years. Here the PCs become a force to be reckoned with and are given the ability to shape the world itself through politics, intrigue, and such. The question asked here is, 'How will you change the world?' I've never actually run a game that made it this far, though.
Arc 6 (Myths): This arc begins at 13th level and lasts until around 16th level. The downtime lasts around eight years. At this point, there is little in the world that can challenge the PCs. Indeed, the world is now a bit beneath them. Here they begin to explore the cosmos, begin walking the planes, sailing through the stars, visiting other worlds, and so forth. They now hobnob not with kings and bishops, but the gods themselves. I suppose the question here is, 'What does real power mean to you?'
Arc 7 (Gods): This arc begins at 16th level and lasts until 20th level. There is no downtime, as when this arc ends, so does the game. The only thing left for the PCs to do is to shed their mortal coils and ascend into godhood. They now join the other gods in shaping the world in a literal sense. They build their followers, establish their religions, and become permanent fixtures on the world itself. (Indeed, in future games, players can even play clerics and followers of these new gods.)
Currently, we are still in the first arc as the party is mostly level 1-2. It had been my hope that the completion of this quest would bump everyone to 2-3, and then we'd do one more quest to finish the arc. But as it appears we are going to end this current quest early, it's unlikely anyone will level here. We'll see how it goes, though!