Setting Having a desert right there is maybe a little too convenient if the rest of the small kingdom is wet and wooded, but that's a minor thing.
Worldbuilding Having some kind of post where players can add their own setting details, businesses, local legends, notable NPCs, common knowledge, etc. is a great idea. Other games have done that and it works very well without much mod oversight. Just ask that players check with you before adding major elements that might break your setting.
Pantheon Sounds good to me. How would you handle minor supernatural beings, like demons or nature spirits or vampires or ghosts? Would those things be playable?
Plot and Plot Hooks That's a good start. You could add in more mini plot hooks while you're setting up the worldbuilding, too - maybe elves and dwarves don't like each other, or maybe there's some political tension between two major court factions, maybe there's a new cult in town that's rejecting the old gods, maybe some townspeople trust the local thieves' guild more than they trust the king's guards, etc. You don't need a lot of detail, but it's always good to have little conflicts simmering in the background to jump start player plots (and then as the game becomes more established, players can start filling in their own subplots).
Classes That's all good, too. Definitely include some ideas for non-adventurers.
Magic/Abilities I'm glad you're keeping a distinction between Divine and Arcane magic, because I was going to suggest something like that. :D Even non-magical characters with minimal training could use an enchanted weapon or mix up a simple potion, so you could have a lot of minor everyday magic going on while still maintaining the idea that sorcerors with powerful innate magic and wizards with advanced magical education are relatively rare things.
How would you handle psychic abilities like telepathy, mind control, extreme good luck, or other things that could be godmode even at basic levels?
Pacing For a game like this, I think slower is better. A 3:1 ratio is as fast as I would go. But I like games with flexible pacing - for instance, where 1 OOC month equals 7 IC days, and new threads can be set at any point during those 7 days. That works out to a roughly 4:1 day ratio, and dovetails very nicely with monthly AC, monthly plot writeups, and monthly plot brainstorming sessions. Then you don't have to worry about referring to a calendar, and you can backdate/forwarddate a little so events occur in a logical order.
Applications Plot-heavy AU games are just almost always small. There have been a few exceptions over the years, yeah... but I don't think there's been an AU game with enough size and sustained player turnover to justify having real app periods since The Sky Tides closed, and that was several years ago. I'd leave them continuously open to start, and then temporarily close them for a few days if you get a backlog of apps. It's not like you have to deal with apps immediately... people usually start to get antsy if they haven't heard anything in two weeks, but if there's an event going on then mods aren't expected to process apps right away.
Activity Check 15 comments is probably fair, especially if this is going to be a game geared towards prose writing. I don't know what kind of rewards would actually motivate players in an AU, though... I guess you could have players pick from a list of things that might be beneficial to their character? A rare/expensive item, or recognition from a superior that increases their status in the game, or the ability to handwave their character learning a significant new skill. Or you could assign a small number of points for completing threads, and have players be able to save up points and OOCly "buy" from a list of rewards. I don't know! It's easy to reward characters in memory loss games or jamjars, but not so easy in AUs.
Re: Fantasy AU Game
Having a desert right there is maybe a little too convenient if the rest of the small kingdom is wet and wooded, but that's a minor thing.
Worldbuilding
Having some kind of post where players can add their own setting details, businesses, local legends, notable NPCs, common knowledge, etc. is a great idea. Other games have done that and it works very well without much mod oversight. Just ask that players check with you before adding major elements that might break your setting.
Pantheon
Sounds good to me. How would you handle minor supernatural beings, like demons or nature spirits or vampires or ghosts? Would those things be playable?
Plot and Plot Hooks
That's a good start. You could add in more mini plot hooks while you're setting up the worldbuilding, too - maybe elves and dwarves don't like each other, or maybe there's some political tension between two major court factions, maybe there's a new cult in town that's rejecting the old gods, maybe some townspeople trust the local thieves' guild more than they trust the king's guards, etc. You don't need a lot of detail, but it's always good to have little conflicts simmering in the background to jump start player plots (and then as the game becomes more established, players can start filling in their own subplots).
Classes
That's all good, too. Definitely include some ideas for non-adventurers.
Magic/Abilities
I'm glad you're keeping a distinction between Divine and Arcane magic, because I was going to suggest something like that. :D Even non-magical characters with minimal training could use an enchanted weapon or mix up a simple potion, so you could have a lot of minor everyday magic going on while still maintaining the idea that sorcerors with powerful innate magic and wizards with advanced magical education are relatively rare things.
How would you handle psychic abilities like telepathy, mind control, extreme good luck, or other things that could be godmode even at basic levels?
Pacing
For a game like this, I think slower is better. A 3:1 ratio is as fast as I would go. But I like games with flexible pacing - for instance, where 1 OOC month equals 7 IC days, and new threads can be set at any point during those 7 days. That works out to a roughly 4:1 day ratio, and dovetails very nicely with monthly AC, monthly plot writeups, and monthly plot brainstorming sessions. Then you don't have to worry about referring to a calendar, and you can backdate/forwarddate a little so events occur in a logical order.
Applications
Plot-heavy AU games are just almost always small. There have been a few exceptions over the years, yeah... but I don't think there's been an AU game with enough size and sustained player turnover to justify having real app periods since The Sky Tides closed, and that was several years ago. I'd leave them continuously open to start, and then temporarily close them for a few days if you get a backlog of apps. It's not like you have to deal with apps immediately... people usually start to get antsy if they haven't heard anything in two weeks, but if there's an event going on then mods aren't expected to process apps right away.
Activity Check
15 comments is probably fair, especially if this is going to be a game geared towards prose writing. I don't know what kind of rewards would actually motivate players in an AU, though... I guess you could have players pick from a list of things that might be beneficial to their character? A rare/expensive item, or recognition from a superior that increases their status in the game, or the ability to handwave their character learning a significant new skill. Or you could assign a small number of points for completing threads, and have players be able to save up points and OOCly "buy" from a list of rewards. I don't know! It's easy to reward characters in memory loss games or jamjars, but not so easy in AUs.