Okay, time to make some of this work public. First of all, I worked up a condensed draft of my wuxia art for Nanjing's local expat paper, 2500 words and missing a lot of the good stuff, but you can read it on the first page of my online journal:

http://www.livejournal.com/users/foreign_devilry

Then, the system stuff:

Shreyas wrote:
Problem 1: When do you jump out of the normal resolution system? Once
you have done this, you fall into the -wuxia scene- mechanic:

Each character has a set of Passions of the sort we have discussed,
with inbuilt conflicts and the like. I'm writing this assuming that,
as the game presses on, you're able to just pull new characters and
Passion conflicts out of the air. Passions have a three-point
"tension" scale which starts at zero; when they get to 3, crazy stuff
happens.

The wuxia scene mechanic determines which Passion is stressed by a
scene; stress raises the Passion by one, in this manner:

You roll as many dice as you have Passions, plus your Tensions
(Problem 2: Too mathy. Solution? Start Tensions at 1 and simply add
them up.) and order them as in your cinematography post. "Precedence"
is determined by who has the larger number of a particular digit, and
that player retains precedence until the tables turn. For each digit,
the precedent player gets to choose some Passion that that run of
shots refers to, and this Passion can't be made reference to again in
that scene, making it immune to tension. The player with precedence
over the very last run of dice chooses some Passion which becomes
stressed and gains Tension.

You use your cinematography method to narrate a series of shots that
explicate this conflict taking place. I think that some elaboration to
the ordering of shots in a sequence could be profitable here.

The import of this is that Tension gives you more authority over wuxia
scenes, lengthens them, and generally makes them more exciting, but it
also makes you vulnerable to Crisis, which is when two three-point
Passions collide.

A Crisis works just like a regular wuxia scene, but at the end, some
other stuff happens. The standard Tension rise isn't eliminated by any
of this other stuff---

First of all, the player who lost Precedence most (we'll call him the
winner) has to choose, by some method, what happens to the loser's
character, out of these options below. The last run of shots depicts
the results. The loser can always instead say, "No, I will die to
preserve my Passion." and make the last run of shots a death scene.
This -can- stress Passions of the other character, if it makes them
impossible to achieve, but in no other way.

1) The loser's Passion (the Tense one that is relevant to this Crisis)
changes, coming into conflict with a preexisting Passion, and
automatically causing that third-party Passion to gain Tension.
2) The world changes; his Passion shifts into opposition with a
newly-created Passion. This causes all the loser's other Tensions to
rise.
3) Both Passions turn their energy outward, generating new conflicts.
This doesn't come with a Tension increase.

Problem 3: Why do you want to die? Possible solution: In all cases,
you can't turn your energy outward if it will cause a second Crisis;
eventually you have nowhere to go, so you must die to uphold the
things that you care about.

Then I wrote:

In order to better understand your system here, I'm going to try to
run a sample conflict, so we can use it as an example to work out the
problems. These solutions are obviously my solutions, feel free to
disagree.

Characters (drawn experimentally from a possible future of Shaolin Burning, this Wuxia-Potter hybrid novel that a bunch of us are working on):

Wuya
2 Avenge My Father's Death
1 Gain Vault's Love
2 Be the Best

Vault of Heaven
1 Be a True Friend
2 Overcome Prejudice
1 Remember that I Am Dead

Wuyun
2 Protect My Sister
1 Make Father Proud
1 Learn to Fly

I think you leave the normal mechanics when situations arise that
would result in Passions being changed. Characters either "give" and
allow their Passion to be raised, or they "fight" they change, leading
to a Wuxia Scene. And, anytime that a Passion hits 3, it triggers a
Crisis wherein that Passion must be resolved in some way.

Scene 1:

So imagine that there's some sort of romantic activity coming up.
Like a "dance" equivilent, which Wuya invites Vault to. Now Vault
knows that Wuya really likes him, but he's determined to Be a True
Friend, which means admitting that's he doesn't think he can, as a
ghost, have a relationship with one of the living. So, if he says no,
it'll probably raise Wuya's tension on Gain Vault's Love, but if he
says yes, it'll raise the tension on him to Be a True Friend (if he
doesn't really like her) or Remember that He's Dead (if he really does
want to love her).

He could fight it, creating a wuxia scene where they try to work out
the differences of their Passions, but instead, he accepts her
invitation and decides to raise Remember That I Am Dead to 2.

Scene 2:

Later, at this romantic gathering, the players wander around and
interact based on the normal rules for whatever the base system is.
They can invoke magic/kung fu powers or whatever too, of course.

Near the end of the evening, Wuya tries to kiss Vault. Uh oh! If
he raises RTIAD again, it'll trigger a Crisis, and his player doesn't
really want this conflict to resolve itself yet, so he has Vault avoid
Wuya's kiss and say, "Look, we can't do this."

"Do what?" Wuya says.

"I'm dead. You still have your whole life ahead of you. We can't-"

"I don't care if you're a ghost. I really like you."

"I like you too," Vault admits. "But it just wouldn't work out."

Not looking good for Wuya's cause. Her player could give and just
raise the tension on Get Vault's Love, but she instead calls for a
Wuxia Scene. The stakes are whose Passion triumphs and who has to
raise their tension: RTIAD vs. GVL.

They roll their total Passions in dice:
Vault 4d6 - 2536
Wuya 5d6 - 14262

Scene Framing - 122234566
Wuya has Precedence on 1, 2, 4.
Vault has Precedence on 3, 5, 6.
(Your Precedence and Framing guidelines seem really elegant.)

1-1: (Wuya) Supercloseup of the tear streaking down her cheek.
2-1: (Wuya) Medium shot of the two of them staring at each other.
2-2: (Wuya) Closeup of Wuya's face, ugly and heartbroken.
2-3: (Vault) Closeup of Vault, turning away from her and dropping a
tear of his own.
3-1: (Vault) Vault begins to walk away from her, back towards the party.
4-1: (Wuya) Wuya cries out, "You may be dead, but your heart still lives!"

5-1: (Vault) Vault stops and looks at the sky, eyes closed, had
clutching his chest.
6-1: (Vault) He turns around and runs to Wuya.
6-2: (Wuya) They kiss passionately.

Conclusion? Wuya triumphs, and Vaults raises the tension on Remember
That I Am Dead to 3.

Crisis! New Stakes = what Remember That I Am Dead changes to.

So, since Vault is in conflict with his Passion (I figure that's kind
of wha Crises are), you need to find someone to represent RTIAD. How
about Wuyun discovers the two of them together, since he continually
tries to remind Vault that he's dead and can represent the Passion in
Crisis.

So Wuyun appears and yells, "Get away from my sister, you soul-sucking
bastard demon!"

All three of them roll:
Wuyun 4d6 + 3d6 (for the Crisis Trait) = 5423413
Vault 5d6 = 61246
Wuya 5d6 = 32351

Scene Framing: 11122233334445566

I figure that precedence in cases where everyone has the same number
of shots, you just start with an established order (like Initiator -
Main Adversay - Peripheral, like it is here, in order of importance)
and then shift when someone gains the upperhand through # of dice.

Precedence and Shots:
1-1: (Wuyun) Wuyun jumps through the air towards Vault.
1-2: (Vault) Vault lets go of Wuya and turns around in surprise.
1-3: (Wuya) "Wuyun, no!"
2-1: (Wuyun) Drop kicks Vault.
2-2: (Vault) Vault takes the blow in the chest and is knocked backwards.
2-3: (Wuya) Wuya punches her brother, "I love him!"
3-1: (Wuyun) Blocks the punch and stares at her angrily.
3-2: (Wuyun) "You can't love someone who's already dead!"
3-3: (Wuya) Pushes Wuyun backwards with a double palm strike.
3-4: (Wuya) "I can and I will!"
4-1: (Wuyun) Wuyun runs over to the fallen Vault.
4-2: (Wuyun) Picks Vault up by his ghostly clothes and says, "You
think you can steal my sister's soul through your false words, demon,
but I'm on to your games!"
4-3: (Vault) Vault loses control and goes all demonlike for a minute,
blasting Wuyun with a surge of ghostly energy.
5-1: (Wuyun) Wuyun flies 15 yards and collapses in a pile, obviously hurt.
5-2: (Wuya) Wuya glaces at both of them, hesitating, but then runs to Wuyun.
6-1: (Vault) Vault stumbles up, staring at his own hands in disbelief.
6-2: (Vault) Glancing tormentedly at Wuya, he stalks off into the darkness.

Vault's player selects the new Passion: Give No Quarter to My Monster
Soul, which both other players approve of as quite appropriate. It
replaces Remember That I Am Dead.

Then, the next scene happens...

------

Looking over this, it seems like Wuyun's player ended up winning the
conflict about "how the Passion changes," even though Vault's player
succeeded in gaining the last two shots. Which is a strong difference
from the first scene, where Vault's player assisted Wuya's victory in
the last shot. This shows that there aren't necessary clear winners
and losers based on the dice. It depends on the shots play out, which
I find really exciting. I don't know if that would be hard for other
players to get a grasp of, but it makes perfect sense to me.

Also, interesting, look at the end of the second scene. Especially
the 5's. Wuyun's player sets the subject of the series, describing
Wuyun getting his ass toasted by ghost energy. Then, we it comes to
Wuya's shot, which has to be on the same subject, she almost HAS to
run and check on Wuyun, which I find really cool. That's how
Precendence in a scene can really influence the options of other
players. Just another neat bit.

Also, I was assuming that you can't describe both an attack and its
effects in a single shot. But if you get several shots in a row, as
part of a series or due to some interesting Percedence results, you
could really pummel the other guy. Hit them in one shot and then
describe the damaging effects in the next one. But if you're
tradition off shots, it makes the attack-block-attack-block kung fu
chain possible as well. Which really works, I think.

Also, I used d6's because it made sense for short scenes and
characters with only a few Passions. If we were using this with
Exalted and wanted to play with d10's, we might need more Passions,
otherwise, you'd get a series like.

Solar - 8265
Abyssal - 7219
Frame: 12256789, where there are just a flash of shots all on
different subjects, with few series groupings to add a sense of
narrative.

-----

Anyway, thoughts welcome. We've progressed a little bit from this point, but this is more or less the general idea. I'm looking forward to playtesting it, actually.