Not so much a whole developed game idea than another mechanic or potential RPG character gimmick.
There have been many "make words to score points" games in the past, starting with the boardgame grand-daddies Scrabble and Boggle and moving down to things like Wordtris and Bookworm Adventures. There's also a couple of RPG-ish ones like Dungeon Scroll, a game I'd recommend to anyone wanting to waste a few minutes building their vocabulary.
This idea is a little different from all of those. For one thing, it isn't about building the biggest words possible; you will in fact be limited to three letter words. Your character is learning the forbidden magical art of litermancy (which may be changed to wordamancy depending on which one sounds less dumb after I've slept on it), which relies on combining three runes to create various powerful effects. Of course, knowledge of what, exactly, each combination of the three runes does has been lost for centuries and will need to be rediscovered by your character.
While you planned on learning this idiosyncratic but potentially powerful art in relative safety and secrecy, a call goes out from your native Kingdom for all registered magic users (those able to use magic being rare in the kingdoms of this world) to be drafted into the Guardian Army to protect the state from an imminent invasion of evil-doers. Thrust out into active combat almost right away, you need to figure out your chosen magical art form and get good at it quick before you get killed; either by the enemy for fear of your emerging skills or by your own army for your wildy unpredictable magic.
The story follows a series of set battles, usually against a group of regular opponents or occasionally a single boss creature. You are taken to a screen with a bunch of jumbled up letters and must fill ten slots with ten three-letter words. The words you make become your magic spells for that battle, shuffled and given to you three at a time in a random order throughout the battle. Specific "real" words have unique effects based loosely around the traditional schools of magic: for instance, a RAT or CAT spell will summon the appropriate animals for a duration, doing damage and blocking enemy attacks towards you. GAP might conjure a hole in the ground to swallow up opponents (or give them trendy clothes, who knows?). Things like RAY or POW will cause direct evocation damage.
Those are the easy spells. You can get more abstract with some words which may end up doing more damage than the obvious ones. For example, SOL, which may not be a well-known alias of our sun, will do horrendous damage with a solar beam - perhaps doing more damage than the more-obvious SUN. Using something like GOD or BOX will have all sorts of interesting effects. Many, many words will have completely insane or benign effects that will either not affect the battle itself at all (though may confuse an opponent) or could end up damaging/aiding either or both sides in some way. Part of the fun (that'd be a good word to use in-game) of this game will be discovering what all these different words will do and maybe incorporating the unexpectedly great ones into your next battle, rather than relying on the same ol' bunch of obvious ones over and over.
As well as forming actual words, the game will have a system where each rune (not necessarily every letter, so you could get two of the same letters with different properties) will have an elemental property attached to it. These elemental properties will disappear if you make a "real" word, superseded by that real word's specific effect. But if you make a three letter combination that is either nonsense or a word that doesn't have a unique effect (there are a hell of a lot of three-letter words out there so not all of them can have unique effects), it will rely on its elemental background for its overall effect when cast. So a word with a strong Earth leaning (three green letters in a random configuration), when cast, will perform a random Earth spell such as a damaging earthquake or healing the good guys. Though usually beneficial to you (as opposed to the often random real words), relying on these random elemental words will not get you too far since their effects will generally be minimal.
I was considering adapting this system to allow for combo spells: You could cast what appears to be a nonsense spell (SHA) and then follow it up with another spell (DOW) to complete a whole six-letter word (SHADOW) for an even bigger spell effect, with the downside being that you have to hope that those two piece-words come up in the same turn. Because you can form 10 words (and this number may go up as your character gets more talented) and only have three available per combat round, you could pepper your arsenal with several of these twin-combo words and hope for a chance to use them. If not, they'll just default to their elemental spell effects. This would add a whole new bunch of unique words to the engine though, which will overload the memory along with all those unique three-letter words. Combine it with the possibility for nine-letter words and it's just getting ridiculous.
While this could go for it's own game easily enough, it could also be adapted into one of those ensemble RPGs where every character has a unique talent or skill. It may be a little dull to make all the new words each time in the latter's case, but it should still prove to be an interesting addition. With all the potentially humorous situations your apprentice magic-user could get into to with his "talent", combined with the amount of exploration to be done (into the words themselves), the game should be pretty awesome fun. IMO.
