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Point system for battles is still something I'm torn about.

I don't see being able to get good items like the cannon early as a problem, since I can just raise the point requirement to such a level where you would need to kill a large squad of 8 kobolds and have some point boosting skills to get it. This way I could effectively lock most of the advanced loot and make it available exactly when I want by simply making the large squads spawn later or make the required skills more expensive, both skill and money wise.

What concerns me the most is the time factor you talk about. 

Trash enemies are both bad and good. Fighting enemies that pose no challenge and offer almost no rewards is bad, but the sence of progression when you kill a kobold in one hit for the first time is quite a nice thing. As you said, putting another window after every fight would only make the bad part even less bearable.

I don't have a perfect solution to that yet. One way is to make weak enemies run avoid you so they don't attack you so often. Another way is to make very, very easy fights "auto-resolve" so you just press one button, get the items and experience and you can go do something else.

If I do one or both of the things above, I could put the new loot into the game and it wouldn't slow things that much.

On top of that, I can try and add some kind of "loot priority" system, where you can arrange all the loot items you ever found in a order. After a battle, you get two options. Select loot manualy or use the priority system to automaticaly get the items on top of your list first and then go down until you run out of points. This would add just one more button press to trash battles, which isn't that bad.