Have you thought about scale differences? Someone might have a greater melee range using a weapon or amorphous limbs. Or maybe someone just decides to go kaiju... It sounds as though you have to get close enough for your opponent to attack before you are allowed to attack, regardless of your own reach, which seems odd. Although I could see it being possible to melee attack someone's limbs if they are attacking you with them, catching someone's elastic fist and throwing them with it sounds like a fairly typical manoeuvre...
I did think about this a bit. The idea is that "mid" range combat involves the type of things you mentioned. Everything from power poles to namekian limb stretches.
Those who have basic ki blasts unlocked (one of the first things you can unlock with mystic training) can use basic attacks at long range as well.
As of now these are mechanically identical to basic punches and kicks though, with only the range differing.
It wouldn't be unreasonable to assume that someone without these things would be unable to strike back without moving closer though. So it should definately provide an advantage.
Have you thought about attacks with long charge-up times?
Such attacks would require multiple actions to use. That is pretty much what I have so far. Should allow for decent balancing, once the numbers get sorted out.
How is the grid labelled?
I intended for it to be easy to visualize without having to do anything like that, but for a basic rundown its 9 mirrored tiles, the x axis is "close" "mid" and "far" and the y axis is "ground" "low" and "high"
Opponents are more or less counted to always be facing each other, so it looks like this:
h---|---
l ---|---
g---|---
fmccmf
How does the theory of dodging big attacks and counter-attacking weak attacks work when people can see previous posts?
That...does throw a wrench in things, admittedly. This is the kind of thing testing was/is supposed to figure out

Since the second poster would have an advantage in seeing stuff coming perhaps the quicker poster should receive a bonus of some kind? Extra moves? I'm...honestly not sure what would be fair here. Which is why this is a brainstorming/test thread.
How frequently should participants be willing to post? I would not want to claim a character just and then not update quickly enough...
Right now anything should be fine. Unless you plan to throw your computer across the ocean in between posts, I think other testers won't mind a bit of a wait. Part of the test is to see pretty much exactly this.
This is a slightly hurried first draft of the system, so what happens in the tests will influence what gets changed and improved.
Also I appreciate these questions RAM, this is pretty much exactly the kind of thing I wanted from the Brainstorming portion of this thread.