Do encounters need to be balanced?

Partially true.
The elder dragon who wears mortal guise was already part of the background. They have a treaty with him as to where they can hunt and other stuff. The players knew of him and knew he could potentially be invoked at any time. The players knew I was improvising. I wasn't fooling anyone. It was unexpected, but it seemed plausible enough to carry on.

I think this is heading in the same direction as my own views. The GM and players are already telling a story whenever they sit down to play Ars Magica. Having Faerie characters enacting some other story inside the game doesn't make an already narrative situation more narrative. It just makes the story different in ways that are generally not to my taste.

Faeries are used a lot in recent AM publications to jump outside of the setting, even to bend genre. We see things like "What if Roland rose up from his grave and wanted to Crusade again, but it was really just a Faerie pretending to be Roland, so we don't have to explain it within the setting?". I suppose there's a place for this but...too much of it wears thin for me very fast. I'd much rather see the actual ghost of Roland with actual motivations.

(Conversely, if the group is more into the simulationist details of the rules, counting point, tracking leatherworkers, and the like, then there's absolutely nothing rule-lite about Faeries that would change that).

I never liked holodeck episodes either. When I turned on the TV I wanted to see a space opera, not Sherlock Holmes with androids. I guess I just like to keep genres separate.

Hi,

That's not new to AM5, though the more extensive rules coverage is.

From a previous edition, iirc, paraphrased: Patience is a virtue, so she (the demon Sainella, Salmonella or something like that) does not have it. But she is very subtle.

Anyway,

Ken