AoOs are an integral, and contested, part of 3E combat. Not necessarily "great". They work reasonably well in a tabletop turn-based environment. They work less well (and make a lot less sense) in a real-time CRPG environment. For an example that supports this, NWN's handling of AoOs felt very haphazard due to when they went off and how they were executed. They were great in ToEE because they were modeling the tabletop environment very closely.
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I did (and do) think that 3E and 3.5 are better games than 2nd Ed., but I did (and do) criticize the choices WotC made when they built and revised the system. I think AoOs are pretty cumbersome,
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AoOs create a new tactical aspect to movement. However, in practice, most of that goes out the window with 5' steps. In 4th Edition, "shifting" (taking a 5'/1 square step to avoid OAs provoked by movement) is your entire move action, which seems like a "no duh" change to me. In the D&D Experience module, the kobolds we fought were "Shifty", which meant that they could shift for free. It made them very difficult to deal with.