I use exhaustion rules rarely, since average PCs are usually built to take combats and short-term runs without even sweating. When they are medivacing a wounded comrade on their shoulders without bothering to remove his combat armor, or try running in a bog, that's when it's time to dig out the exhaustion rules. They are a condiment; used sparingly they make player despair tastier.
On psychic refraction periods.
I switched from the old SM2 preparation round system to refraction rounds and haven't regretted it yet. Players can now react to situations that crop up suddenly instead of gazing at their navel for two rounds before stunning a foe. Deciding on the level of power is a gamble for the players, though. They have to decide if risking refractory-induced incapacitation is worth dealing with one problem, since another problem is usually just around the corner.
The core rules are a bit harsh on low-level psis, IMHO, so I use the optional rules that allow use of powers during refraction or maintenance. We haven't yet decided what penalties work best with the campaing power balance, but currently any activation during refraction suffers that rounds refraction penalty, and activation during maintenance gets a flat -20 on activating a new power. It's possible to maintain several powers at the same time, but players rarely do this, since they a) run out of points and b) don't have the time to buff up since activating multiple maintained powers rapidly is suicide because of refraction penalties.
Thus far the system has worked. It allows players to use low-level powers like short-term paralyzation, or to set up complicated plots (if they have the MP) when they have time. I must admit that I like fine-tuning the system with house rules, and that sometimes the house rules fail spectacularly.
