Three hundred years ago, Herman, a human retainer to a magic user of some power, was for a brief instance granted amazing, god-like powers. In those few moments, he wanted nothing more than the world to be simple and so it became.

Everyone above third level (the highest level character he'd met in person) either winked out of existence, became a lower level or suddenly got the urge to stay in their castle and gather monsters and treasure unto themselves. Whole armories of weapons he'd never seen disappeared. Magic items were limited to those he'd heard of and suddenly everyone used the same coinage. A clearly marked thieves guild popped up in every large city.

The thing is, everyone knows that this isn't how the world is supposed to work. They are actively aware that they lived in a stunted set of physics. While they still don't express things in "+2" or saving's throws, they understand that there are three levels of achievement and that some people don't have to run away randomly when things turn against them.

In the game's present day, Elves have become the Chaotic overlords, their nation narrowly held back by the combined alliance of fighters (who are the finest merchants in the world) and clerics. A nation was founded by thieves who are feared, for while their skills are meager, no one else has any chance to commit thievery. The magic users, now second class citizens, joined with the thieves. Dwarves turned neutral and keep to their nation while halflings became wandering gypsy monster hunters, due to their skills with missile weapons and relatively good savings throws.

There are three gods: The God of Law (who is benevolent and grants his clerics the power to heal), the God of Neutrality (who wants everything equal, so he heals the sick to keep things even) and the God of Chaos (who rejecting the natural order, heals the sick to spit in it's face).

At the age of eighteen, some people get the questing sickness. Usually this is first noted by them spontaneously writing down a spell in the large empty book that just seems to appear or a desire to go spend their life savings on armor and a sword. The afflicted then wander into the nearest tavern, sit at a table with others suffering the disease and wait for a rumor or a job offer that sends them on their first adventure.

The rules I'd be following would be pretty much straight out of the book. I'd be using the optional rules of Morale, Variable Weapon Damage, and initiative penalties for two handed weapons. I'd try to limit myself to the magic items and monsters in the book, except where the rules state the GM has some leeway.

Because I can't leave everything alone, there are some house rules I'd want to use:

Natural 20's do double damage. Backstabs that get natural 20's do triple.
Natural 1's mean that you drop your weapon, trip, or otherwise lose a turn to recover.
Punches do 1d4-3, Kicks do 1d4-2. This means a punch does 0 points of damage on a 1-3 or 1 on a 4.
Battle Axes can be used as one or two handed weapons. The do 1d8 one handed, 1d10 two handed. Either way, they make you lose initiative in Paired Combat. (As written in the book, there's no reason to use them).
If the party is outnumbered, use group initiative. If not, Paired Combat.
Everyone starts out with their max hit point roll at first level.
The Normal Human monster has 1/2 a hit die.
Magic users choose one spell and then get one randomly or may have Read Magic. Elves get one spell, chose randomly.
At creation, a character can decide to have an heir. When the die, 10% of their wealth and equipment disappears and shows up in the hands of a new first level character.

Also, there is a magic item called a Point of Order. They come in two varieties, large and small. These were created when Herman left the plane, scattered all over the world. They look like amber teardrops and when crushed, they alter reality just a little. What this means is that a small Point of Order will allow you to bend one rule (like canceling variable damage and having all weapons do 1-6 points of damage) for 1d4+1 turns. A large one will allow you to bend a rule for 2d4+2 turns or break a rule (say falling damage or weapon restrictions) for up to 1-3 turns.

They appear in the same treasure types as other magic items in addition to the magic items for that type.