I don't think hpassives should be taken out completely, but instead items should be taken out(Because there is a ton of items and it seems most of the boss ones are useless, if you feel the need to keep the items, just have it cost honor points still.). You get a set amount of Points anyway so its really not overpowered. It would be easier to have balance and have certain passives only apply to certain characters with limits if possible.
Disarm should be taken out completely and be replaced with bash, has less broken AI.
Like say for example main attributes can go up to 10:
Phodom: Counter Attack, Natural Resistance, Bash, Force Blow
Fradz: Lifesteal, Critical Strike, Evasion, Blind
Galeoth: Magic Resistance, % to Replenish Mana, % to Block Magic, Trance
Side attributes can go up to 5:
Phodom: Magic Resistance, Trance
Fradz: Natural Resistance, % to Replenish Mana
Galeoth: Evasion, Counter Attack.
All Skills cost 2 Boss Points instead.
You can still use honor points for abilities if you feel like you want to change to whole system. BTW for cooldown and reduction cost, couldn't you just make a whole new spell with the same animation and description but with lower cd and cost? IDK just a thought. The upgrading of abilities which adds bonuses does sound pretty cool though.
I'd say also with this system you can get rid of the old element spells also and reuse them into the ability upgrade system.