Vagrant Story is the last of Square's moody PSX masterpieces (the others being Final Fantasy VII and Xenogears). It's also the last Square effort for the PSX. And for those of us who are waiting to see if Square will be able to blow us away with its PS2 endeavors as it did in its PSX days, it's a sign that it certainly CAN.
Vagrant Story is a masterpiece on every level. It fuses gameplay with story perfectly - stop at a door, and the camera might zoom right into a cutscene. The transition occurs seamlessly, and the resulting camera work, angles, lighting, etc. are actually cinematic. That is to say, whoever directed this baby might want to take their resume to Hollywood. The graphics are not the bright, colorful rendered backgrounds of Final Fantasy VIII - instead, they are more reminiscent of Xenogears, except far smoother and with less pixelation. Indeed, the rotatable environment will remind many a gamer of that particular title, except here Square worked all the kinks out of it and made it far more beautiful. Also like in Xenogears, there are numerous times when the (fairly good) ambient soundtrack gives way to background sounds for added moody effect.
The gameplay is another huge plus. It's kind of hard to describe, but this is a good analogy - take Super Metroid, then put in into three dimensions while retaining all of its fun. Ashley Riot may not be as lithe as Samus, but as you run between the Undercity and the Town Centre and what-not, it may bring back memories of running between Brinstar and Norfair. (In fact, the map systems of the two games are identical - the only difference is that one is in three dimensions.) Since the game designers knew that combat in three dimensions is quite a hard thing to design, they did it this way - when you attack, the action freezes and you can leisurely select a body part on the enemy to whack. Likewise, the action freezes when they're ready to do the same. (And you can put select body parts out of commission, too.) To keep it from being boring, they added Chain Combos, so you can link together fifty attacks at once - except the more you attack, the higher your RISK gets. RISK is just that - a measure of how ready you are for combat - so the higher it gets, the less accurate you will be and the more you will leave yourself open to attack. There's also quite the huge weapons system, with a dozen different kinds of weapons that can be broken down and put back together, with three kinds of blades made from seven possible kinds of materials with six possible kinds of elemental affinities. Confused yet? Actually, it's not nearly as hard as it sounds, since the first three or so hours of the game go at a very leisurely pace to let the player get accustomed to the environment, and you really don't have to tinker with the weapons until you really get the hang of the controls.
But the game's best aspect is by far the story. First, this is probably the best translation job ever done in the history of RPGs. Not only is it perfectly translated, it's perfectly translated into formal English, in an apparent imitation of Shakespeare. This matches the game's rainy, Old-World atmosphere completely. Pretentious? Sure, but Vagrant Story never collapses under its pretentions. The game is essentially a large mystery where you're given the first and the final act at the very beginning, and spend the rest of the game piecing together the middle to make sense of it all. It's extremely engaging, brilliantly directed and genuinely suspenseful, and provides a nice brain-eater of a resolution. (All this while taking place in only one huge abandoned city, no less.) Cutscenes are integrated throughout all of the dungeons, and there's always good motivation for both Riot and you to actually go find that door that one guy told you to find. The cast is comprised of three-dimensional, believable people (with distinct, very realistic faces, much more so than they were in Final Fantasy VIII), and the way the story is presented is very mature for an RPG - without any overly long brooding angst. There are some holes, or rather, some things that were deliberately left out, but instead of inciting rage, they make you think. (And should you want to go through it again to try and understand it better - by all means, use the good old New Game+ option, to avoid having to build up all those weapons again. As an added incentive, an extra 15% of the map opens up to you if you do.)
It's surprising that the game was ever allowed to be made, as the Middle English dialect, complicated plot, moody environment and very complex weapons system don't exactly make for "commercial success" on paper. But it was, and it stands as arguably Square's finest hour (definitely the finest-crafted), and one of the most visceral, well-directed, well-presented, meaningful and just plain fun RPGs of all time. So even if they botch their reputation in their PS2-developing career, at least it's certain that they did once deserve it.