It had three very huge flaws in it. First they made each character pretty much pointless. With a press of a couple of buttons, you can swap everything two characters have. The only difference between characters were their limit breaks, and some of them were rather similar.
Second, it let every character do everything. Why decide if you want a fighter, a healer, an offensive spellcaster, etc., when you can have everyone do everything? You tend to find a few key materia and give it to everyone in your party, making everyone capable of doing the same useful actions. There's no incentive of trying to master weaker skills when everyone can have the most powerful of each type of action at all times?
Third, it was too prone to abusive combos if you knew what you were doing, which shattered all the difficulty of the game unless you intentionally didn't use your best setups.
It had potential, but it's not even the best FF system. Heck, I think the way FF5's system made you carefully pick your skills and jobs to compliment each other was a lot better crafted, as did FF10's system where each character had an identity and actual strengths and weaknesses.
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