Considering the special rules will be coming up first the TO&E discussion, even by me, is all hypothetical. That said there is nothing wrong with us tossing it around. Basically I am open to any suggestions/ideas and will be posting my own here and there with my comments.
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You'll likely find it never worth taking bigger stuff at all if you wire in that kind of a flaw to start with.
Better to work with ratios or other formation composition constraints, rather than just making the big stuff too expensive in points to be worth taking.
I was afraid the way I put it was going to cause confusion as to what I meant, a bit extreme in the numbers category, my bad

Think of it based upon the Ork Horde model in which a discount is given for the bigger formations of the Barrel of Boyz formations, but no discount given to the other Non-Barrel of Boyz formations for the Nid model I am suggesting. Further the upgrades would be individual units, but no discount would be given for them, and all formations would have the option of upgrades.
This encourages players to get the Barrel of Boyz formations for the core of the army while at the same time doesn't restrict them from getting other formations, or forming an entire army out of those other formations if they want to.
Does this put across better what I meant or is everyone still confused?
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I think the Ork model offers the most freedom in army list construction and allows people to field everything they have, whether it's 10, 17 or whatever number of units. Can I ask what problems people see with the approach?
The problem I see with the module system is your enforcing a certain number of units per module, and thus adding a constraint.
Expanding on Jaldon's example, if Termagant modules have 5 units each then I can't have a formation of 8 Termagants. Why not?
I think the Ork model offers the most freedom in army list construction and allows people to field everything they have, whether it's 10, 17 or whatever number of units. Can I ask what problems people see with the approach?
Depending on how it is done. If there is too much freedom, as in the original early Nid lists, it becomes almost impossible to play balance the monster. Modules have the effect of allowng players some reasonable freedom to build their army while at the same time making it easier to play balance the list. The Ork model allows even more freedom then modules, but still places a base number of restrictions on the army making it a bit easier to play balance IF the additions bt isn't taken too far. See the above comment for the rest, which is whay I put it first.