My idea is to completely re-do the leveling system and make it more of a skill system, like what Ultima VIII tried to do but failed at miserably. The Chao themselves would learn through repetition and a more advanced praise/scold system. Chaos Drive grinding was the worst thing about raising Chao to begin with; a new game would essentially have to recreate Chao Adventure, but in 3D. This would entail large, non-linear areas to explore and raise your Chao in, and there'll be some genuine challenge (nothing arcane) in accessing new portions of these areas. The premise is that you're exploring Chao World through a select avatar (could be Sonic, could be Alex Kidd, who knows!) and interacting with the indigenous critters to progress and love on the little guys.