The terrain rules have always been the weak spot of the game, in my opinion. I've had some ideas about how to improve them kicking around for a while, and in light of the recent developments, I figured there would be no better time to throw them out for discussion.
This does require a bit of a change to terrain, though. FFG loved to create odd-shaped terrain. These ideas would require straighter sides to the terrain. The terrain doesn't have to be symmetrical, but does need flat sides, with 4-10 points (depending on terrain size and type) marked along the edge of the terrain. On smaller pieces of terrain, these points are at the middle of the sides, and on larger pieces, these marks are at the vertices.
Units in terrain can be either dispersed or focused. To be dispersed, the unit's size has to be equal or greater than half of the capacity of the terrain. Whether a unit is dispersed or focused is decided by its owner when the unit enters the terrain, and can be switched (if the unit is large enough) by executing a reform command. A unit in terrain that loses enough trays that it drops below half of the terrain's capacity automatically becomes focused, and its owner must choose a facing (see below).
A dispersed unit acts follows the existing rules for units in terrain: it's considered to have all edges of the terrain as its forward facing. Shifting or marching causes the unit to exit the terrain but not move forward, and the appropriate edge of the unit must lie flat against the terrain. The only notable rule change from the current rules is that, similar to a unit entering terrain, whenever a unit exits terrain its turn immediately ends (scuttling horror or a fleshripper's pre-action move will end the unit's turn right away, it can't get extra movement from the modifier dial, etc.)
A focused unit has to choose a facing: it picks one of the marked sides/vertices of the terrain. This side (or the two sides next to a verticie, if the terrain is large) count as the unit's forward facing. Combat is affected appropriately (the unit's firing arc is 90° from the forward side(s), other units attacking from the non-forward arc get flanking bonuses, etc.)
However, a focused unit can exit terrain quicker. When a focused unit dials in a march, the unit is placed with its back edge along the terrain on one of the sides in its forward facing, and then it can still move the difference between its programmed move and the number of ranks it has. For instance, if the unit had two ranks and programmed in a four-distance move, it would be placed with the back of its second rank touching the side of the terrain it had as its facing, then move forward an additional two distance.
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Hopefully, I did a sufficient job of explaining what I envision. I've had two main issues with terrain: it didn't make sense that a single tray of spearmen in a giant forest could see and fight in all directions. A brigade of spearmen, sure, but one? And why do archers magically become able to see in all directions when they enter terrain, when they couldn't before?
And I've never liked the movement out of terrain rules. Your knights bunch up, ready to charge... and can move just far enough to get outside the terrain, and no more. Entering terrain gives you the magical ability to spin on a dime and exit in any direction. Stuff like that.
Let me know what you think. I was also tossing around the ideas of allowing multiple units to enter terrain, if there was sufficient capacity, but the ideas weren't quite developed enough to post yet.