The downside of character creation in L5R is that it takes a lot of time and gets you really invested in your character in a system where people die when they are killed. I get the feeling that the books encourage dynastic games, where people retire and get replaced by their descendants, but the rules for new characters in the same campaign are one of the weakest aspects of the system.
I'm patching together a simplified, hybrid system somewhere between L5R, and Legends of the Wulin. I chose LotW because I like its alternative to HP-mechanics and the fact that its basic combat engine works about equally well in social duels as in physical ones. Going to try to create a system where character creation provides a base from which descendants more easily spawn. One of the main things will be dividing advantages/disadvantages into inheritables and non-inheritables, and making a random table for next-generation quirks akin to the L5R heritage tables.
Also adding a system for "leveling equipment". Your possessions don't gain XP as such, but every time they're passed on they gain some degree of spiritual resonance. It may take the form of a small skill bonus, they may develop special abilities, they may start building their own GLORY stat. This is not limited to weapons, but they have to have been obviously important to the previous character.
I'm assuming familiarity with LotW here, because explaining the system would be a post in itself and possibly of debatable legality. I'm just using the basics of the basics of LotW. Dicepool "Lakes", Rivers, Chi, Conditions, Marvels. I'm cutting virtues and archetypes and secret arts and loresheets. I'm also cutting styles, so Chi should also be lower and harder to grow (which also, incidentally, makes characters easier to hurt). Permanent injuries as a result of exceeding by 30 will also be a common thing.
Might keep the skeleton of external styles, with the "laughs at/ fears" mechanic, but without the techniques and far fewer combat stats. Might just introduce a L5R or NIOH-esque stance system instead. I'm changing the combat stats to Speed (SPD who strikes first), Hit (HIT how accurate you are), Damage (DMG how hard you hit), Defense (DEF how well you dodge and block), Body (BOD how resistant you are to damage).
Dramatically expanding the skill list, and will probably change how they're aquired and the bonuses they give. Something like every rank costs its number in XP, and you get three times (3x) your rank as a bonus when the skill is relevant. Most people max out skills at rank 3, exceptional people reach 5 (rank 4 and 5 require special ingame feats to achieve, I might make skill-specific suggestions), ranks beyond that are possible but require really good in-game justification.
Your "School Rank" (or Level or whatever I should call it) goes from 1 to 5 and your dicepool is always 5+Rank. You increase you Rank with a combination of skills and chi. Every time you rank up (starting with Rank 1) you get to add a permanent +5 to either one of your combat stats (SPD/HIT/DMG/DEF/BOD) for a maximum of +10.
Handling Social combat as essentially the same as normal combat except it uses "social styles" and various social skills for attack and defense. I'm considering a system where you benefit from diversifying because you only get the full benefit of a skill-bonus once per social "combat", and only the base skill rank bonus (as opposed to skill rank x3) thereafter. Social combat will also use a different set of stats, to further differentiate more socially and more combat oriented characters. I haven't decided how exactly it will work yet, but I'm thinking something more fluid, more like Honour/Glory mechanics in L5R, where the current state of your ethos and reputation are as important as your wit. Will probably develop a system of XP for influence to allow courtiers to build their social stats without necessarily becoming better fighters than fighters through rapid advancing in school ranks (as warriors are more likely to focus on few skills).
Iaijutsu will be handled by Iaijutsu skill. Participants roll their dicepools, pick their highest result and add iaijutsu rank x3 for speed and accuracy (still two different results, depending on SPD and HIT stats), then the second highest for defense (add DEF stat). You roll ripple-dice as if your opponent had no defense whatsoever (so if you roll 43 and your opponents defense roll is 32, you still roll ripples as if you had exceeded their defense by 43). If one character exceeds the other's SPD roll by 10 or more, they strike first, and compare their HIT-result to the opponent's DEF roll. If they miss, the opponent makes the same comparison (their HIT-result to the other's DEF-result). If your results are within 10 of each other, both strikes are performed, but the character with the higher result still goes first, and if their strike connects, the opponent only rolls half the number of ripple dice. You add your iaijutsu skill (x3) to your DMG stat when performing the ripple roll. Roll Chi and add BOD as usual to resist.
Iaijutsu may be used outside of a dueling context, but it requires a separate roll-result for sheathing the sword before each strike and uses none of the iaijutsu duel mechanics beyond adding iaijutsu skill (x3) to HIT and DMG (and possibly SPD if its the first strike of the combat encounter). It may also require maintaining "drawing stance" or equivalent, if I introduce a stance system.