Over the past few months our main concern has been developing the game world and story enough to give us a good clear background to design the actual levels. We have the main plot, or its outline, a geographical map of the game world and a lot of descriptive worldbuilding of places.
There isn't much left to do on the codebase. One of the last major tasks is to implement the diplomatic stuff that the player will have to deal with while exploring. There are a number of different factions that control a mishmash of different garrisons, barricades and encampments. Some will be friendly, some will be neutral and others will be hostile. Creating combat NPCs that are other than 'hostile' is my job at the moment. Today I had fun pitting the two NPC sides against each other.
Allowing the player to command allies might be useful; at the very least I think the player should be able to order them to follow him. NPCs aren't very active on their own.
Factions in Project 7 are more than just descriptors though. The most ambitious part of the design calls for the player to have influence rankings with each faction. By doing missions for them, you gain influence. By messing their stuff up, or going into unauthorized areas, you lose influence. The snag is that factions will often want you to fight a rival faction, and some covert elements are in the pipeline for this. The key is to avoid witnesses. Kill a neutral? Better do it out of sight.
As well as normal NPCs spotting you, there will be Sentries, special troops that act as reconnaissance and commander. If they catch you, they can alert in all their comrades and call in reinforcements via dropship.