>     Please correct me if I'm wrong, but it appears that according to this
> license, it would be possible to create a game that uses  the d20 system
> with a completely new magic system, armor that absorbs damage instead of
> adding to AC, and AC that is modified by the character's base to-hit
bonus.

That is correct.  It would, in fact, not be at all surprising to see games
from WotC with such variations.  Indeed, a "D20 Ars Magica" might fulfill at
least the new magic system/armor-absorbs-not-AC ("soak") points.

-John Nephew
President, Atlas Games

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