Okay, I'll try to critique what you've said.
"Attacks will be preformed off a control setup using the directional pad as a selector.
Attack
/\
Item/Special<-------->Skills/Magics
\/
Defend"
This sounds fine to me. You've got all the normal things like attack, defend, skills/magic/specials (what exactly's the difference between these three though?), and items. I'd say make sure defend has a purpose (at least I prefer it that way). Having the D-Pad choosing set-up's nice, but in the long run it doesn't really make the battling any better or worse (I'd say). So, nothing special, but nothing bad here. Maybe you could allow the player to change the support character orders/tactics in battle too though, I think that'd be better than only outside of battle (the command could be "Tactics" or "Orders" or something I guess).
"There will be status effects including - Poison/Silence/Confusion/Sleep"
Sounds fine to me, as long as there are items/support characters who can take off silence, and support characters who can take off any and all action-disabling effects like confusion, sleep, and petrify (later mentioned by you).
"There will be enemy attacks that allow - 1/2 HP deduction(usually only a Boss can do this)/1 HP remaining(only a Boss can do this and surviving will require preperation)/Slow Death/Petrify and steal HP/MP"
The only problem with the -1/2 or down to 1 HP is that it may make bosses too hard. Just make sure support characters can heal the main character for this (what I said in the eariler post, you know) kind of stuff. Might I recommend what FFX did where it gave a warning before the bosses did super-poerful attacks, so that the player can plan for these tough ass attacks like heafty damage and petrify/paralysis before-hand. Maybe your battle system could be more about learning how enemies fight and overcoming them tactically than strengthening up (although this'd be tough and lengthy to plan and make and what not).
"A 'Limit Break' technique called Dire Tactics will be available in a FF8 style setup."
Sounds good to me. I always preferred not so much FF8's way because you basically had to choose to heal up or risk dying and attack, which with one party member only in battle this could really lead to problems like just guessing and hoping you won't die to do a Dire Tactics. I like the name Dire Tactics though, as far as things go.
"Status problems disappear after 3-5 turns or sooner depending on help from support charcters, or battle preperation you have prepared."
Sounds good, even petrify and paralysis? But yes, this is pretty necessary with the one party member issue at hand.
"The support character will act randomly depending on you're current condition and what parameters you set for him/her/it to follow."
I'd rather they not act randomly, but somehow along how the player wants them to. I'd be pretty mad if I lost because my tird ally lowered the enemy'd DEF instead of healing me or something, or randomly never did anything to help that battle. Maybe you could even make it so you simply told the allies what to do, or something like Ogre Battle (which I can explain if you don't know, just ask).
"Support characters can either heal HP/MP, restore status, create a stat boost, use items, cast spells(aid or hinderment), or use missle attacks at enemy."
Sounds good.
"Battle preperation will require planning. Listen to the people you run across in the game, they can give you viable clues on how to survive encounters in the wild. Before taking on a Boss, spend time learning his/her/its strenghts and weaknesses. Always save before anticipated Boss battles! Your preformance in battle will be related to how well you prepare! "
Sounds good, just make sure not to make things too hard, you know.
"By prepare I mean using proper tactics, wearing appropriate armor and accessories, and know you're own strengths and weaknesses."
I figured, yep.
"You can assign your support battle tactics from the ones listed above and the ones your support character has access to, all of which will be activated randomly depending on your current condition and what level of priority you assign to their skills."
Sounds good, but I'm still kind of confused how this works (not explained too well).
"Final Note: Battles in my game will rearly be easy. Battles will not be overly ferquent (on average 5 - 10 per dungeon depending on the size of the dungeon of course). In battle the player will only have acces to the items in your inventory, the bag will not be accesable(in real life you can't tell your enemy to wait while you search for that potion in the bottom of your backpack). And finally, have a little faith. I wouldn't have come this far if I didn't think I could deliver."
Yep, I have the same with the items in my game, since it's much easier, makes more sense, and in the end doesn't allow the player a huge list of 300 items to scroll through and use in battle. Yep.
Just kidding ;D Are you planing to use the DBS like I am? Your battle system looks like it could be done the same way mine was done. Other than the suppost character idea (which would be easy to set up using trait scripts), your battle system seems similar to mine.
