[Suggestion] Champs/Sovs not holding a weapon and no shield should get +5 to Initiative.

There are staffs that give a plus to magical power and damage and don't hit your initiative. I take your point though, there should be an advantage to not having anything equipped.

I don't want to take over your thread but do the crit chances and crit damage on daggers carry over to spell casting with the daggers in hand?

Yes, since they boost your stats you get boosted crit chance even on your spells.

They do. Crit and crit damage works on spells. You'll see this if you ever make assassin casters. Quite devastating.

As for the OP, buy a dagger.

i agree, this does sound reasonable. Although, something to consider is that this mechanic already sort-of exists. You get initiative penalties if you're wearing too much gear, and it's concievable that a shield could push you over that. but i agree it isn't enough. A "Free hand" initiative bonus would be good too.

penalties start at 40% weight, was thinkin maybe get a +1 init bonus if under 20, then another at 10, and another at 0?

I like this. Make it worthwhile to have a pure mage wearing robes rather than being clad in plate armor from head to toe.

might also give another +1 for each 10% under 0? incase one wished to specialize in speed (this way you might end up with your +5 your wanting)

No, this isn't about weight. It's about the extra advantages that come in combat with having a free hand. You could grab enemies and pull them towards you, push off the ground to stop yourself falling over, or to help you get up faster. Use two hands on your weapon for powerful swings, or toss it from one hand to the other for easier reach in different directions. It's about flexibility.

To clarify, i'm thinking of one-handed weapons only. Not staffs or spears or anything else big, and not really for mages.

Perhaps it could be represented by a small bonus to initiative, dodge, and a free counterattack. Think of it like a fencing style, light and graceful

Penalties at weight? Oh crap, see there is another mechanic that passed me by, I just always piled on to max. Does it tell you the penalties if you mouse over the weight bar on the equipment screen? I am at work.

Under the character image in details, you see a blue bar indicating encumbrance, Hover there with the mouse and a tooltip indicates penalties

Another way to reward not using a shield would be by giving shields an initiative penalty. Say, -1 for the simplest, lightest shield, -2 for the medium ones and -3 for the Heavies.