dtgreene: First, there is one reason that a skill system where you can reallocate can be desired; passive skills. Passive skills are skills that are continuously active (like the "HP Up" skill I mentioned that raises your maximum HP), rather than skills you activate. Since it doesn't take a turn to activate them, having lots of passive skills will make you very powerful and be potentially gamebreaking; the skill system then serves to limit how many of them you can have active at once.
Second, the system I described does not let you reallocate skill levels gained through usage, and the idea is that most of your skill levels will come from usage, with skill points being only a small factor. If you only have 3 skill points and want Party Heal (using the example above), you would need to learn Heal by spending SP, use Heal until you gain 3 permanent levels, and only then would you be able to use SP to get Heal level 5 and Party Heal level 1.
Since all RPG systems are models of portions of the reality in the gameworld, I am trying to give this system a translation into world mechanics (mathematics into physical meaning, if you want). It might be understood as "focusing" your attention and training into different abilities.
You are considering only skills, not attributes at all? Like, one day you focus on healing and speaking in public; next day on fighting and jumping. With attributes, one day you would focus on being strong, next day on being smart.
For passive skills, you might be counting the time that they have been available, instead of actual usage. You might as well do it for ALL skills. After all, you would be training them, even if you do not use them. The problem of linking actual usage to skill increasing (a Lamarckian increase, if you wish) is that the player becomes LESS free to experiment with the character, and the system you describe seems to hold protheic change and adaptation, as well as playful experimentation, in high regard.
For me, I like that, maybe modern games are making us spoiled, but it is nice to experiment without having to wait to another full playthrough. You can still devote time and effort to develop your character, but if you do not have so much time to study the system, at least you can easily avoid the worst blunders once you realiza that the skillset you thought at first would be great is the worst combination since bubblegum and aprons. To put it in another way, nowadays, forgiving systems that allow you to learn from your mistakes WITHOUT having to restart are a good think (let those who want the absolute best ever combination restart near the end if they wish for one extra point in jumping because they realize they forgot to jump once at the beginning of the game).
Also, pen & paper or computer? If you want to use it with a computer you may make it a bit complex without having to worry about the players and master/game director becoming insane with the calculations. I guess you are thinking computer JRPGs mainly?
Nice thread.