Yes, this definately has been argued before, but as someone else brought it up this time, I thought it wasn't just me having problems.
I personally don't mind which system you use, as long as whoever is using it finds it "usable" and effective.
By "production situation" I didn't necessarily mean in a big commercial studio, but rather, "in practise", if thats what you're asking.
Also, I have read up on how a lot of other game artists work, and *seen* many texture sheets for a number of games. For example I don't believe DAoC from Mythic Software uses such a system.
But- I recall one talented artist had a good timesaving idea for unwrapping his game models and painting them. It shared some similarities with this template system. (IIRC) He was hired by some game company to create say 10 characters for their game, so what he did was model a generic male and female character, and unwrap them how he saw fit. Then he modified those generic characters to form other characters and only needed to make minor adjustments to his UV coords, and then as usual paint the maps.
The system sounds like a create timesaver, obviously not the same as a full template system, but this way you dont need to model and unwrap a character from scratch each time.
Just thought I'd pass that as a possible idea.
* ah, in fact, I remembered who it was, I'll pass a link to his thread, really good characters by the way.
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