Don't have much time (lunch break nearly over), but I'll post what I know:
Combat balance can be adjusted VERY easily as long as you have a spreadsheet, some time, and an understanding of the hard coded combat engine. My shard has an entirely new balance to the combat system designed to enhance Player vs. Monster combat (as my shard is small). It is much more difficult than stock uox3 (as my players generally are in the 80--100 skill range), and the monsters are balanced such that an armored GM swordsman can't go to the orc fort -eat a pizza- and come back and found 150,000 orcs dead and only 5 hp damage to himself.
Skill modifications can be done via JS, as long as the skills are NOT hard-coded. For example, I took some non-used Samarui and expansion skills (such as bushido, etc.) and converted them to roleplaying skills for my shard: Listening, Character Judging, Perception, Spot, etc.
The downside and more complicated is editing client files to display the skills properly as well as your custom items. Editors exist for editing the *.bmp static graphics for the item names and also the skill names.
Changing the gump graphics and backpack graphic of a sword to another sword is rather a simple procedure of replacing the *.bmp files. Making an un-used weapon like a samuri weapon or armor and converting it to a medieval sword by changing the gump *.bmp, backpack art, and linking it to a longsword video is a bit more daunting but not that difficult. I can't remember where I got the utilities though.
Understand that by the terms of service you are unable to distribute client files (*.mul, etc.) If you want to tow the law, you can legally send your raw custom content like *.bmp files over to your friends, but you can't send the complied *.mul files as they contain copy-write materials. At least that is how I understand the terms of service, so read it yourself if you are worried.
I guess you could send them the *.bmp files and have them hack their own files.
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Creating new maps is a pain. I've tried and never started again. Think of a 25MP high-end digital camera. That's 25 million pixels. Basically -if I recall correctly- the UO map is the same size. Each pixel being a world tile. You have to hand paint each pixel with color-indexed colors in order for the processing program to convert your indexed *.bmp into a world with elevation changes, etc.
Even though the idea is fairly simple, to get a large world would take YEARS (I'm not kidding) to do by yourself. Best idea is to have a group of friends help, or do a SMALL world.
Then you have to use Xuri's world builder to build your static buildings (which is a blast by the way) and then "Freeze" them or you are going to have lag issues. This will take a lot of time too. I prefer to just add buildings and decorations in the current Britannia instead.
A newly created world shouldn't be against terms of service, as the compiled file won't contain any copy write material, so that is a plus.
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Servers:
I ran it just find on a Pentium 4 single core 2.0ghz machine with 512MB of ram, running the server off of a DIAL UP connection AND a client on the same single core machine. I had up to two friends playing at the same time. Obviously we had lag in towns, but that was mainly because of the dial up.
I moved to a Pentium D with 2GB of RAM and could easily run 4 connections with one connection being on the same PC as the pentium D and the rest scattered between local area and DSL.
Again, the bottleneck was the DSL.
On my current i7 rig with Vista x64 and 6GB ram, I can easily run 3 clients (one on Vista, and two on two seperate Windows 7 Virtual Machines with 1GB ram a piece) AND the server while having a friend logged in via DSL. This includes my spreadsheets, Xuri's world builder, music files, and *.pdfs that I have open as GM aides.
The bottleneck now is the DSL AND the slowness of my hand moving the mouse and switching from one client to the next!!!!!!
In short: I would NOT hesitate to run Uox3 as a server for up to 5 users on a slow Pentium II machine with 256MB of ram. Your bottlenecks will be the internet connection AND your hard-drive (load up times and world save times will increase/decrease depending on your disk drive IO and RAM speed). With a modern dual core/ quad core PC as a dedicated server, I have no idea what your limit will be. With all that crap loaded on my i7, Uox3 was taking hardly ANY resources from my rig.
If my link hasn't expired you can see a pic. of my desktop here:
http://www.uox3.org/forum/viewtopic.php?t=1792
Whew! Now lunch is over. You are lucky/unlucky that I type fast!