Well, i would think having partial collision detection would be better than no collision detection at all, but i guess its all up to you. ...Unless you are willing to overide all of the collision methods as well XD

There is a fix for draging the object between acts. In the setLocation method, put in a call to super.setLocation(#,#) and then set your variables. This also helps with collision detection i believe.

There are 2 ways to do the 'wandering' you guys speak of. One way is to have the gray borders that keep track of objects and add/remove them to the world. The other way is to create a support class to override the get/set position methods so that the limits are removed without any necessary change to code. I don't think either of those are the problems though (although no source, so :P) I am guessing you are writing images to the background to take care of the workaround you did with pacman? Correct me if i am wrong

You and your isometric engine :P very nice looking, even if it is a bit fast right now! Can't wait to see where this goes, right now it has kind of a RollerCoaster Tycoon feel to it :)

Yeah, that is already in place via offset variables that allow child bones to be attached at offsets to the parent bones. Also the center of the object is in seperate variables, so that can be separately defined. Indeed, this is used in this character, as you can see by the motion of the feet, which would not be possible by simply rotating the childs, the offset is being set and reset each frame.

I think the impulse idea would work well. We know that since we are avoiding friction for the moment, a collision can only exert force along the normal. (And consequently with spheres, rotation does not occur) If we take into account friction, then there is a force tangential to the surface. Anyway, when you do impulse on a point, a percentage of that force goes into rotation, and the other percentage goes into translation. This is a bit more difficult for me though, since I do my simulating in a completely different matter, by simulating the elasticity and deformation of the object XD

This is looking really great! The collisions seem to be working really well, and running the scenario for a long period of time doesn't seem to yield any problems :) Just out of curiosity, have you seen my Rigid Body physics engine?