I've been giving a lot of thought to Palladium's Megaversal System as of late. Now, I grew up on that system through Palladium Fantasy and Rifts, so it doesn't really bug me as much. However, I can see where it would bother the snot out of some people.
I don't have anything concrete, but here are a few things I would address, in my idea of Palladium.
Attributes That Mean Something: Right now, there is an entire range of stat numbers under Palladium that give no bonus or penalty. I'd like to see something more akin to the bonuses in d20, or in using stats in more of a roll-under sense. Let's make stats count. Heck, tie them as a bonus to certain skills, maybe.
Weapon Damage: OK, the whole MDC/SDC thing, I'm ready to junk it. Go for SDC only. Make any weapon that has more than 1 dice of damagege and is more than a 1d4 have a "Wild dice", which open-ends whenever the highest possible result is rolled (6 for a d6, 8 for a d8, and so on). This would help give a sense of hope against those opponents who take crazy amounts of damage.
Point-Buy, Open-Ended, Roll-Over Skills: I've always thought roll-under percentiles for skills was slightly unintuitive. I would take a page from Rolemaster: Roll a d100, add your skill rating. A 96-00 roll open-ends, and you get to roll again until you don't open end. You have to roll over a Target Number, depending on the difficulty of what you're trying. A 1-4 is a fumble. This ensures characters are not as limited in skill knowledge, and makes modifying a simple add-on of skill difficulty.
For skills themselves, no more class-related and secondary skills. Different classes will have different skill categories ranked as either Class, Normal, or Restricted. Class skills only cost 1 point to bump the skill up 5 percentage points (each investment is called a rank). Normal skills cost 2 points per 5%, and Restricted 3. Once you have 50% in a skill, the skill percentage increase per investment drops from 50% to 3%.
Scrap XP: It's a pain in the ass to track. As you may have guessed from above, Experience Points would be out of the mix here. Use simple Development Points, and award between 5-10 at the end of every session or (depending on your game). These may be saved or used as needed, and can be awarded for good roleplaying, participation, or making the GM laugh. Development Points can be used for skill or stat increases (stat increases being exceedingly expensive).
Simplify Combat: "I have 6 attacks or actions, he has 3. When do I take mine? OK, I dodged. Did I lose an attack?" OK, let's clear this up. Make Attack, Parry, and Dodge a single action in a single round. If you Dodge, that's it, unless you have another attack. Rounds are 10 seconds; players with any Hand-to-Hand Skill get 2 Attacks or Actions to start. Players get another action for every 10 points of dexterity above 10. (So 20 gets one more, 30 gets 2 more, and so on...). A weapon proficiency starts you a +1 to hit with that Weapon; not having it puts you at -4 to hit. Armor is an all-or-nothing proposition; you need to put 5 ranks in it to show comfort; otherwise, you're at a -4 to hit while wearing.
For every 50 or 100% put into Hand-to-Hand Combat Skill, you can choose either +1 action per 10 seconds, or +1 to strike in hand-to-hand combat. For every 50 or 100% put into a weapon, you gain another +1 to strike with that weapon. If you want to do something cool with a weapon or in combat, you also roll a skill check with your Hand-to-Hand or respective Weapon Skill. For example, carving a "Z" into the chest of your cyborg opponent with your Vibro-Blade might be beating a TN of 150 on your Vibro-Blade skill. Rolling to "sweep the leg" on an opponent would likely be a check vs. your Hand-to-Hand Combat skill (with a +25% bonus for quoting The Karate Kid during said attack), or, more likely, a contested check of both parties' Hand-to-Hand Combat skills.
Magic/Psionics: I will admit, I have no idea what to do with this one. Here's a few random thoughts: I'm going to say whatever the level of the spell, that's how many ranks you need to cast. It would also mean that you roll your Spellcraft skill for the type of spell (Utility, Fire, Attack, Cold, Defense, etc.). That would mean categorizing all the spell lists. Same deal with Psionics. Both Psionics and Spells would use Power Points. Goodbye, PPE/ISP.
Of course, I realize all these may appeal to just my style of gaming, and nothing here is written in stone. It's also hard to reinvent the wheel, but still try to have a system somewhat compatible with an old one. But it's fun to think aloud, sometimes.