Re: What do the people want?
Whether it is "watering it down" really depends on what kind of rules you are including.
What if I make myself as a character and include an intellect in the top 1% of the human race, highly flexible and fast (almost hits the world record on the 200 meter dash), a very broad skillset and experience and knowledge of many topics from physics to anime, a record as being undefeated in unarmed combat even by military instructors, a sharpshooter with either hand for both rifles and pistols, etc.
It sounds crazy and overpowered, but all of those statements are true about me, but compared to the common idea of an average person it is way above average. And how should I know when others think my character knows too much about too many things.
Having some form of rules allows everyone to be on the same page in terms of just how powerful a character can be, how much they can know, how good they can be at how many things.
Freeform suffers from the fact that what I think is reasonable and what others think is reasonable are very unlikely to match up.