Oh cool actual discussion! Quite nice ideas everywhere. I guess this can be discussed here then...
One thing I thought, that could be atleast a starting point/implemented inside the bigger co-op part, would be just a single party system.
In this, the host could play just normally, gathering army and stuff. He could invite his friends in, either when starting the game, or whenever visiting a city. Other players would create their characters, and join the host's party as mercenary, like we have Borcha and others now.
Lets say that I'm playing with 3 friends. I hire them from a tavern shortly after starting the game. By default I am the leader, so I move the party around the map. But if I want, I can give the command to some of my friends, so they act as the leader, until I press button "take command of the party".
Then, we decide to attack this bandit party. I have some infantry, archers and cavalry and my friends in my army. We chose that I'll take third of the cavalry in my command, as my bodyguards. My friend takes command of the remaining cavalry, acting as cavalry commander. And then the two others take command of the infantry and archers, (as infanty commander and archery commander).
I can watch over the whole battlefield, while giving info/orders to my friends. This way everyone would have something to do, and some more advanced tactics could be used. Like dividing infantry to two groups and surrounding the enemy by flanking them. And lots of other cool stuff.
If some of my friends happen to fall unconscious, no problem, battle goes on. If I happen to fall unconscious, someone else takes the command until I get enough health to continue. If all of us fall unconscious, then the battle is lost.
When entering a city, everyone can go do stuff individually, and party can't leave until everyone is ready to leave. (Or maybe have the host be able to force players to stop shopping?)
Next time we play, maybe one of them can't come. In this situation the AI takes control of the character and the game can go on. (Or the host can play it by himself, and his friends' characters are just normal party members)
You would all have to stay in one party, so there wouldn't be problems with the time flow. Would also be pretty cool to ask your friends to act as commanders if you happen to be attacked by a big party, and you need help beating them. (This would of course only be possible if they have characters in your party already.)
Each player would have their own inventory, as well as an access to the party inventory.
The looting after battle.. Either there could be just a single pool where everyone can pick stuff to themselves, or then each player have their own pool. Or then a mix of those two.
Money could be shared by some ratio.
Honestly I'd be really happy to have even this in the game. This could be then expanded later, to allow each player have their own party and stuff like that.
Edit. Ohhhh I'm a knight now!