After talking with Roh and listening to Hiro's and Janus' arguments about 
the idea of "holding" spells, I have an idea of how I'd envision a cool, 
logical and balanced system of doing it.

Spells should cease to feel like just some crap that you can cast out of a
pool of magic, then wait for it to recharge for the next battle so you can
deliver full-power again -- it's very warrior-like right now with casters
giving their all, then recovering, except that casters have to both heal
_and_ recover mana to be viable in a fight again.  This leads to the
really long boring sleeps that casters have to deal with.  Also the little
utility spells that casters have tend to fall into disuse because they
drop into low pracs as a result of their infrequent use and their cutting
into the mana pool.  You'd rather just have a damn item. 

First off, the technical implementation:  I like the idea that held spells
reduce your maximum mana and also reduce your mana heal rate.  But going
along with that, one-off spells should be changed dramatically.  They
should take much more than they do to cast, but heal rate for mana should
be vastly faster -- something on the order of healing-to-100% in one tick. 
Let me explain how this works. 

Currently the rate of healing and cost of casting is set in great part by
the fact that you need to limit how often casters can cast spells that
have an extended duration.  You don't want clerics sancting everybody on
the planet all the time, but once it's cast, you want it to last a
reasonable amount of time.  And then one-off spells came along for the
ride, their power and mana cost tailored to match this slow recovery time
that you need to delay the ability of the caster to put extended effects
on people. 

Spell holding of course fixes one aspect of this.  You can sanct as many
people as you can support with the mana you have available to tap into
(which of course isn't terribly many at once).  But since extended spells
are no longer time dependent, you have more freedom now to play with how
one-off spells are handled.  Allowing you to quickly recover full access
to your power source (as I imagine it would feel if healing happens over
the course of seconds instead of minutes) lets you get off combat spells
in a more metered way.  For example...

A mage of a certain level, unencumbered by protecting groupmates, could cast
a fireball every, say, 10 seconds throughout a battle as pulses of mana
use become available to him rather than in a barrage at the beginning of
battle.  Alternatively he could offer some magical protection to his 
groupmates during battle, but as the amount of extra mana available and 
his rate of recovering access to it is decreased, he would only be able 
perhaps to cast flaming hands every once in a while, if anything at all 
depending on how much protection he's maintaining.

It can easily be balanced so that casters don't become immensely powerful,
but what they do become is much better at choosing how they want to use
their mana and able to be viable in combat (as long as they aren't
spending all their energies on protecting others) more regularly.  They
become managers of a flow of magical energy rather than musketeers, firing
all they've got then hunkering down to reload for a while. 

Two other more minor but vital additions.  Mana/heal cost of holding a
spell on the caster itself should be much lower than holding it on others. 
I just makes sense and would allow a mage to keep endure
cold/heat/featherfall sorts of stuff on himself most of the time for
example, which seems proper.  Seeing casters with items for that stuff is
really lame. 

Also I think a meditation state would be cool and would balance out the 
use of some of the non-combat one-off spells.  This state would give the 
caster access to more mana power, perhaps up to a maximum of 1.5 to 2 
times his natural amount.  It would take time to build up to that full 
amount, perhaps a few mud hours.  It would come of course at the cost of 
making the mage more vulnerable to attack, unable to attack himself, and 
perhaps something appropriate like deafness.

This extra mana would make the caster able to offer greater protection for
groupmates.  Also it could be used for any one-off spell, but it would
vanish as soon as any one of those spells was cast (and remember this is
much less of a big deal since we've balanced the spells for more metered
use).  One-off spells such as blink, knock, or cripple would often
actually _require_ enough mana that meditation would be necessary to get
them done, unless the caster is of very high level.  A time of reduced 
maximum mana after meditation might be a good balance as well.

* * *

Imagine a group in distant lands with a cleric.  The cleric spends most 
of his mana maintaining sanctuary on his groupmates, helping them ward 
off attack from whatever they might encounter.  They find a mighty beast 
and decide they will try to defeat it.  The cleric removes his sanctuary 
from a lesser groupmate, giving him just enough mana access to cast 2 
flamestrikes in a very long, hard-fought battle.

But one of their comrades has fallen.  They want to retreive him to the
group to get his equipment and continue on.  The cleric removes all his
protection from the group and enters a long meditative state while the
group stands by to keep wandering creatures at bay.  At once, the cleric
opens his eyes and successfully casts summon and the groupmate appears. 
While the equipment is looted and reworn, the cleric regains his full
access to his magical power source and is finally able to reestablish his
sanctuaries for the group.  They proceed onward.