Just finished reading this entire thread. Starting to understand why people like Morrowind so much, there's an interesting world to play with. And I think LordBucket has done a superb job bringing it to life, in the directions that the players actually explored.
Here's an observation, though, for what it's worth: With Michael so underpowered, and any kind of power up slow and expensive, he's effectively railroaded to stay in civilized areas and means of transport. His only asset is his knowledge of the game, which becomes more obsolete every game day, and which he has to be careful not to share too much. If I was playing this forum game, I'd wonder exactly how I was supposed to make a difference in the world.
To be honest, after reading the whole thread, it seems clear to me that Michael was not meant to power up, especially considering the GM's desired time scale: he was meant I think to use his knowledge of the game to track and influence events, to maybe clue in one side or the others to better change their fate.
It seems obvious to me also that since the power curve is just too steep for Michael to be a PC-style player, he wasn't meant to be one, and training his skills is wasting time. If you were sent back to WWII, would you waste your time becoming a soldier, tank commander, or pilot; or would you use your knowledge of Axis strategy, tactics, and force arrangement to help the Allies crush them years earlier, as the most awesome intelligence asset ever? The closest this thread came to this was after the genocide at Khuul, which to me is the high point of Michael's involvement with what seems to me the intended story.