Changes are marked in orange.
The city of Sharn will be used as a general jumping-off point. Whatever your background, you should end up there. Whether you started there is entirely up to you.
Psionics: 50% transparency, as far as spells like Dispel Magic, Antimagic Field, etc are concerned. No UMD/UPD overlap. Kalashtar may elect to replace Use Magic Device with Use Psionic Device upon taking the first level of a class that offers it.
Magic: The standard level of magic in Eberron applies.
Books allowed: 3.5 core, Complete Series*, Races of series (PrCs and Feats only), Expanded Psionics Handbook, Eberron Campaign Setting, Races of Eberron, Sharn: City of Towers, Five Nations, Explorer's Handbook, Magic of Eberron, Player's Guide to Eberron, Player's Handbook II, Tome of Magic, Heroes of Horror (Base classes, non-taint-related feats and PrCs). Others with DM permission. Obvious Rule 0 disclaimer.
Effective Character Level (ECL): 4
Races: Humans, Changelings, Dwarves, Elves, Gnomes, Half-Elves, Half-Orcs, Halflings, Kalashtar, Shifters, Warforged, Daelkyr Half-Bloods, assorted Goblinoid residents of Darguun (Goblins, Hobgoblins, Bugbears). Other races will be considered on a case-by-case basis. Sub-races (grey elf, dream dwarf, and the like) are generally going to be rejected out of hand — they don't really fit the way the setting works.
Ability Scores: 32 point buy
Hit Dice: Maximum at first, fixed 1/2 HD for each subsequent level, as per R's game.
Starting Gold: 5,400 gp, no more than 50% may be spent on a single item
Alignments: I'm not a fan of alignments in general, but they serve a valuable game purpose, inasmuch as several mechanics require their existence. Don't feel constrained to goodness, but playing a psychopath with no redeeming characteristics is strongly discouraged.
On Dragonmarks: I don't have any problem with them. In fact, I encourage it, simply becasue house connections make such great plothooks.
On Organizational Ties In General: It's hard to stay unaffiliated in Eberron. Most groups provide tangible benefits to their members, at the obvious cost of either being beholden to someone, or sharing your groups' rivals and enemies. In any case, organizational ties are very much encouraged. You may wish to conspire with other players while coming up with backgrounds.
Substitution Levels: Can be found in Races of Destiny (Half-Elf Bard/Fighter/Ranger, Half-Orc Barbarian/Druid/Paladin), Races of the Wild (Elf Paladin/Ranger/Wizard, Halfling Druid/Monk/Rogue), Races of Stone (Dwarf Cleric/Fighter/Sorcerer, Gnome Bard/Illusionist/Ranger), Races of Eberron (Changeling Psion(Egoist)/Rogue/Wizard, Kalashtar Monk/Soulknife/Psion(Telepath), Shifter Druid/Ranger/Wilder, Warforged Artificer/Fighter/Paladin).
Multiclassing: While I generally come from the same school of multiclassing as R, and favor their definition as base skill sets, many Eberron-specific PrCs carry organizational ties. It's probably best to check with me about any class that implies an organization backing it (for example, the Nightsong and Daggerspell PrCs from Complete Adventurer) so that we can work on properly framing them within the world. As a general rule, let your roleplay govern your class choices.
Action Points: As per pp.45-6 of the Eberron Campaign Setting, you recieve 5 AP + 1 per 2 character levels. Feats and PrCs for enhancing AP use can be found in the ECS (Action Boost, Action Surge, Heroic Spirit, Raging Luck, Extreme Explorer, Dragonmark Heir, Heir of Siberys), Races of Eberron (Ancestral Guidance, Heroic Metamagic), and Magic of Eberron (Prophecy's Hero, Heroic Companion, Rapid Infusion, Wand Surge, Heroic Focus, Psionic Luck, Psionic Rush). Also, see House Rules below for an additional use for AP.
Favored Classes: I dislike them, and they don't play well with any non-PHB classes, for the most part. All races have Favored Class (Any).
Additional Uses for Action Points: In addition to the uses listed in the Eberron Campaign Setting, you may spend two Action Points to (if you are a prepared spell caster) regain a spent spellslot, or (if you are a spontaneous caster or manifester) cast a spell or manifest a power without expending a spell slot or power points.
Artificers: Artificers may use their Craft Reserve to compensate for the XP cost on the Spell Storing Item infusion.
Spell Storing Item spell limits: For purposes of the Spell Storing Item infusion, Artificers may emulate any spell contained within the PHB and the Eberron Campaign Setting. Possession of scrolls/other spell completion items of spells not in those two books will allow you to emulate them, as well.
Metamagic Item: Cannot push an item's effective spell level over 9th.
Persistent Spell: Short: It doesn't exist. Long: While I appreciate that it can be useful, I don't want to deal with the potential problems that it can cause.
As mentioned above, the initial setting of the game is the city of Sharn. Some questions to think about while coming up with a background: