
The Arbiter |

Well, Azander had a readied action to shoot if he saw Tommy, and he fired because Tommy revealed himself (with his own shot), so the readied shot couldn't have actually happened 'just before' the triggering action. This means that as far as I can tell, Azander's initiative goes to the middle of Tommy's turn. Since initiatives don't work that way, we're disregarding the impossibility of firing at a concealed opponent just before they become visible, and putting Azander's initiative just ahead of Tommy's, which makes Azander go now (after he fires his prepared shot).

Gladiator_Eben |

Yep. But, in a 1v1 arena setting, i think you're over-complicating things. Whether his initiative resets to right before, after, or during (which would have to be reset to before or after), Tommy just finished his round, which means Azander's up (since he's now either right before Tommy's next round or right after the one he just completed).

Gladiator_Eben |

Well, so far the only wrench has been the Stealth example. And – in that example – the wrinkle is that the readied action would happen just before the trigger, but the character with the readied action can't use thier readied action until the moment that stealth isn't in play. This seems a bit of a corner case, but I agree with Count Visage's solution. For fairness to RAW, RAI, and logic, adjudicate it as if they happened simultaneously, which resets the Ready-ers actions to the same initiative count as the trigger. And given that there are already rules for deciding who goes first if two characters have the same initiative count (it goes to the character with the higher initiative mod; or – if even those are equal – an additional initiative roll-off), I say we use those rules.
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This means, in this situation and no matter how many characters are in the arena, you would adjudicate it by using the initiative mod/roll-off rules.

Warrior of the White Wolf |

Once again, I'm sorry to have overcomplicated things with my actions. Sigh...
Crossbow attack: 1d20 + 3 ⇒ (13) + 3 = 16
Crossbow damage: 1d10 ⇒ 3
Azander looses his own bolt at Tommy, then drops his crossbow and charges at the halfling, foot outstretched.
Free Action: drop crossbow
Full-Round Action: Charge, attacking unarmed with fighting defensively
Fighting Defensive Charge: 1d20 + 1 + 2 - 2 ⇒ (8) + 1 + 2 - 2 = 9 Strength, Charge, Fighting Defensively, respectively
Unarmed Damage: 1d6 + 1 ⇒ (1) + 1 = 2
As a note: Azander is still in Crane Style.

Gladiator_Eben |

:: Round 6 ::
Surprise briefly registers on Tommy's face at the assault, though he dodges around both the bolt and the kick, taking a retreating step backwards into the fog. He shakes his head with a tsk tsk tsk sound as he quickly reloads the big crossbow.
Azander would see the 5' step into D.06 (but beyond that, there would be full concealment so no visuals)… I'm assuming cranking the crossbow is fine for you to know, given the sounds it would make. :)

The Arbiter |

Crap, I suppose I never actually confirmed it was Azander's turn... umm... it's Azander's turn. We'll ignore any freeze for now, unless you both really want the fight to be over. Azander knows which square Tommy is in, so no perception necessary.

Warrior of the White Wolf |

Yeah, sorry, hadn't checked.
Azander, sick of this fight, draws his blade, steps forward, and swings at Tommy, one hand still poised at his side.
Move action: draw sword. Free action: 5-foot step. Standard action: attack, fighting defensively.
Fighting devensively attack: 1d20 - 1 ⇒ (13) - 1 = 12
Temple sword damage: 1d6 + 1 ⇒ (4) + 1 = 5
Azander gets the +2 bonus to AC, and has Crane Wing.