It's cool. It's not that I didn't understand the concept of distributing points, rather I just couldn't make sense of what I should do with them (hence why I asked for your opinion).
I think what you gave as an example for me is a good starting point, given that certain things (i.e. his magic) will be something I think my character learns over the course of the story.
As for things such as fights, I've always tried to employ a sense of 'fair play' in what few organised things have happened in RPs, so I think that setting the outcome of fights won't be too difficult; it could be decided behind closed-doors that a scenario will result in victory/failure for one or several/all people involved as a means of plot evolution or simply resorting to the tried-and-true method of "rolling a dice and letting fate decide."
I would rather it be like that than people quabble over 'godmodding' or being OP (which I guess is what the purpose of skill points are for - to provide balance, strength/weakness etc.) I'm happy to take on the random chance idea if it comes to that, and the Karma idea too. (I often dabble with the concept of the balance of good/bad karma in the story I'm writing, as well as sometimes making it seem like divine intervention ... whether for better or for worse.)
For the character-stats thing, I'll take what you said and keep it as that for now; I'll look it through now and again. How many points does a character have in reserve, btw? I think you said 40. I'll have to think on how best to distribute those points over character development, especially when the concept of learning new things comes into play.
(btw my feet are frelling killing me :/)