Still hacking away. Took a bit of a break for a while there but am back into it now.
Stuff I've achieved:

• Added a new nice font to the inventory/shopping screens.
• Sped up NPC code considerably and made them plan a little.
• Fixed some bugs in the Line Of Sight code (seeing through walls).
• Return more information from Line Of Sight test (obscurity, distance).
• Added some initial code to detect visible off-screen NPCs.
  • Some more UI code work:
  • Added text input widget, including concept of focus.
  • Pass all details of mouse click to on_click handlers.
  • Worked on styling, including fixing the rect rendering.
  • Added some more tests.
• Added character abilities, including the first one "Super Strike".
• Added light mapping (needs optimisation).

Added some code to smooth out the lighting. Nicer now :)

Download here: threads-of-fate-2.1.zip. The complete list of changes follows. The big stuff is bolded.
Note: the game hasn't been tested beyond the first dungeon following all these changes :)

• Add in light mapping - currently characters have the only light sources.
• Use lighting in attack chance calculations.
• Fix display sorting of player info background image.
• Line Of Sight remembers an "obscurity" amount used in combat and lighting.
• Fix Line Of Sight in certain cases (around corners, through walls).
• Better feedback during battle displaying amount of damage dealt/received (or healed).
• Scaling of interface fonts to fit smaller/larger screens.
• Fixed the visual offset sometimes seen when rendering attack animations.
• Add clicking of character in map to activate.
• Add a simple first-run help message when entering the tactical game.
• Fix blocking check for adjacent actions.
• Allow diagonal movement and adjacent actions.
• Add green box highlighting currently-active character.
• Clean up the cobble tiles a little.
• Lots of graphical glitches removed.
• NPC turn feedback.
• NPC brains sped up considerably.
• Make NPCs remember what they were doing at a basic level (ie. who they were attacking and where the target was) so they don't get lost along the way.
• Some game balancing with the NPCs so they're not such a walkover now.
• Better NPC turn handling so their animations play completely, giving the player better feedback.
• Added initial code to detect off-screen NPCs. Not used.
• Grant all characters some basic level of brawling skill.
• Add character abilities including the first one - Super Strike.
• Added character traits - first one is LowLightVision (not actually granted yet).
• Add a whole new (generic) user interface implementation:
  • Includes vertical / horizontal layouts
  • Labels and Buttons (both with text and/or image)
  • Text Input (including focusing)
  • Styling controls, including "skinning"
  • Drag-n-drop support
  • Has some tests
  • UI elements may be animated using Cocos actions (color, position, etc.)
  • Re-implemented all game user interfaces to use the new code.
• New font for inventory and shopping screens.
• New font for title menu.
• Add in better command-line option handling.
• Refactor out the music player to a single point to detect ability and also command-line --nomusic override.
• Add command-line control over fullscreen / window sizing.
• Fix resource snafu with finding save game files.
• Allow immediate selection of arbitrary levels from command-line for testing.
• Fixed a bunch of other bugs.

Lots more to do :)

Download here: threads-of-fate-2.2.zip. The list of changes since 2.1 follows.
Note: the game still hasn't been tested beyond the first dungeon following all these changes :)

• Add command-line ability to grant party XP and coin.
• Add some testing of combat outcomes. This includes some balancing and tweaking of the combat algorithms.
• Add zooming of display using scroll wheel.
• Add drag-grabbing to scroll map around.
• Add grab-hand feedback in generic UI.
• Visually indicate when an attack misses.
• Characters now informed when an attack on them misses.
• Spells are able to alter difficulty based on circumstance.
• NPCs now communicate and use their memory of PC locations.
• Optimisations in NPC path generation.
• Use GL_NEAREST when scaling up weapon sprites.
• Fix menu styling across board, including scaling.
• Fix bug introduced into assigning experience.
• Fix broken bashing action.
• Fix save/load of abilities.
• Some additional code cleanup removing out-of-date dags.

I've still been working on the game. I've added the much-requested simple command control. When you hover over an enemy a potential attack type is highlighted over them (eg. sword, bow or energy bolt). If you left-click at this point your character will attempt that attack. Speeds things up considerably.

I've not forgotten about this project ;)

I've been hard at work cleaning up another project: Bruce, the Presentation Tool.

I am holding off releasing the final pyggy version of Threads because I really want to re-do all the tile art. I'm not sure I'll actually get that done, but I'm hopeful. We'll see...

Sadly I got sidetracked by other things and couldn't put the final polish on the game before the deadline. A lot of the user interface has seen significant improvements. The AI is much better. The code internally is much nicer in many places.

This final release moves forward in a few areas: the AI is again improved and there's the very nice new user action interface which mostly just uses left-mouse clicks (the action menu is only needed in rare situations).

Unfortunately I also changed the way the tile mapping is done in preparation of using a new tile set ... which didn't end up making it into the game. I'd still like to put a new tile-set in.

I tried to attack an enemy and then the game crashed. The mage was dead - maybe that's related. ;)

Traceback (most recent call last):
  File "run_game.py", line 9, in 
    main.main()
  File "threads-of-fate-2.3/gamelib/main.py", line 66, in main
    director.run(cocos.scene.Scene(MainMenu("Threads of Fate")))
  File "threads-of-fate-2.3/cocos/director.py", line 296, in run
    event_loop.run()
  File "threads-of-fate-2.3/pyglet/app/xlib.py", line 94, in run
    sleep_time = self.idle()
  File "threads-of-fate-2.3/pyglet/app/__init__.py", line 187, in idle
    dt = clock.tick(True)
  File "threads-of-fate-2.3/pyglet/clock.py", line 698, in tick
    return _default.tick(poll)
  File "threads-of-fate-2.3/pyglet/clock.py", line 295, in tick
    item.func(delta_t, *item.args, **item.kwargs)
  File "threads-of-fate-2.3/cocos/cocosnode.py", line 688, in _step
    action.step(dt)
  File "threads-of-fate-2.3/cocos/actions/base_actions.py", line 101, in step
    self.update( min(1, self._elapsed/self.duration ) )
  File "threads-of-fate-2.3/cocos/actions/base_actions.py", line 346, in update
    self.actions[ found ].start()
  File "threads-of-fate-2.3/cocos/actions/instant_actions.py", line 134, in start
    self.func(*self.args, **self.kwargs)
  File "threads-of-fate-2.3/gamelib/actions.py", line 298, in done
    self.attack.level.scroller.remove(self)
  File "threads-of-fate-2.3/cocos/cocosnode.py", line 400, in remove
    self._remove(obj)
  File "threads-of-fate-2.3/cocos/cocosnode.py", line 410, in _remove
    child.on_exit()
  File "threads-of-fate-2.3/gamelib/actions.py", line 302, in on_exit
    self.result()
  File "threads-of-fate-2.3/gamelib/actions.py", line 187, in do_hit
    self.other.apply_damage(damage)
  File "threads-of-fate-2.3/gamelib/character.py", line 439, in apply_damage
    self.dispatch_event('on_character_death', self)
  File "threads-of-fate-2.3/pyglet/event.py", line 340, in dispatch_event
    if handler(*args):
  File "threads-of-fate-2.3/gamelib/level.py", line 198, in on_character_death
    director.replace(success.Success(level))
  File "threads-of-fate-2.3/gamelib/success.py", line 20, in __init__
    [self.party.items.append(i) for i in character.pack]
AttributeError: 'PC' object has no attribute 'pack'

Some can be real bugs, other not implemented code. Anyway:

after clicking a character to select it, the green frame dont show till you move the mouse.
sometimes the 'next character' will skip one or two characters in the party.
sometimes clicking over a character dont select him, but clicking in the hud element for the character does it.
party pawns can move over a position where an enemy stands.
sometimes party pawns can move to a position where another party pawn stands.
dotie with bow, having APs can not fire.
lodo cast energy bolt: bolt apear over lodo position, not over enemy.

Two tracebacks: one the known
[...]
File "D:\pygame\threads-of-fate-2.3\gamelib\success.py", line 20, in __init__
[self.party.items.append(i) for i in character.pack]
AttributeError: 'PC' object has no attribute 'pack'

The other:

EnergyBolt: 4 damage to PC Lodo health=-10
PC Lodo health=-10 damaged 4
Traceback (most recent call last):
  File "run_game.py", line 9, in 
    main.main()
  File "D:\pygame\threads-of-fate-2.3\gamelib\main.py", line 66, in main
    director.run(cocos.scene.Scene(MainMenu("Threads of Fate")))
  File "D:\pygame\threads-of-fate-2.3\cocos\director.py", line 296, in run
    event_loop.run()
  File "D:\pygame\threads-of-fate-2.3\pyglet\app\win32.py", line 63, in run
    self._timer_func(0, 0, timer, 0)
  File "D:\pygame\threads-of-fate-2.3\pyglet\app\win32.py", line 84, in _timer_f
unc
    sleep_time = self.idle()
  File "D:\pygame\threads-of-fate-2.3\pyglet\app\__init__.py", line 193, in idle

    window.dispatch_event('on_draw')
  File "D:\pygame\threads-of-fate-2.3\pyglet\window\__init__.py", line 1217, in
dispatch_event
    EventDispatcher.dispatch_event(self, *args)
  File "D:\pygame\threads-of-fate-2.3\pyglet\event.py", line 340, in dispatch_ev
ent
    if handler(*args):
  File "D:\pygame\threads-of-fate-2.3\cocos\director.py", line 306, in on_draw
    self._set_scene( self.next_scene )
  File "D:\pygame\threads-of-fate-2.3\cocos\director.py", line 362, in _set_scen
e
    self.scene.on_exit()
  File "D:\pygame\threads-of-fate-2.3\gamelib\level.py", line 654, in on_exit
    super(Level, self).on_exit()
  File "D:\pygame\threads-of-fate-2.3\cocos\cocosnode.py", line 459, in on_exit
    c.on_exit()
  File "D:\pygame\threads-of-fate-2.3\cocos\layer\base_layers.py", line 90, in o
n_exit
    super(Layer, self).on_exit()
  File "D:\pygame\threads-of-fate-2.3\cocos\cocosnode.py", line 459, in on_exit
    c.on_exit()
  File "D:\pygame\threads-of-fate-2.3\gamelib\actions.py", line 302, in on_exit
    self.result()
  File "D:\pygame\threads-of-fate-2.3\gamelib\actions.py", line 415, in do_hit
    self.spell.do(self.level, self.character, self.cell, self.other)
  File "D:\pygame\threads-of-fate-2.3\gamelib\magic.py", line 88, in do
    other.apply_damage(damage)
  File "D:\pygame\threads-of-fate-2.3\gamelib\character.py", line 439, in apply_
damage
    self.dispatch_event('on_character_damage', self, old_health, damage)
  File "D:\pygame\threads-of-fate-2.3\pyglet\event.py", line 340, in dispatch_ev
ent
    if handler(*args):
  File "D:\pygame\threads-of-fate-2.3\gamelib\level.py", line 135, in on_charact
er_damage
    sprite = self.get_sprite(character)
  File "D:\pygame\threads-of-fate-2.3\gamelib\level.py", line 113, in get_sprite

    return self.character_sprites[character.name]
KeyError: 'Lodo'