My primary request is that whatever list is chosen for first development is that it be capable of stand alone Knight action. Which is to say, it should be structured such that you can field nothing but Knights and have at least a reasonable game.
Right now the Knightworld list variants are one of the few that don't even offer the option to field INF based formations, which I think is both unique and interesting from a list design standpoint. I'd prefer to avoid tacking on half the Steel Legion Support formations to it. Infantry should be very sparingly added, if at all. I'd be more inclined to see the sentinel/squire options expanded for that role, or possibly even replacing the existing artillery type units. The Cadian, Elysian, Harakoni and Catachan lists all have some interesting variations on the basic sentinel. The Harakoni Support Sentinel seems like a good basis to replace the Trebuchet, for instance.
In general, I'm reasonably happy with the 1.4-beta version that Carlos posted, and would be fine if the loose ends were tidied up and called good. I'm also fine with removing or reducing the availability of Titans if people feel they're not on theme (though I personally wouldn't mind if at least the warhound stuck around, as they serve nicely as a sort of Super Baron).
As for actual models at the moment I actually have only a few random plastic Paladins I picked up in assorted ebay lots. But I've been looking at the idea of using 15mm walkers as proxies, in particular from the Ion Age line:
http://theionage.com/products/iaf030b1- ... bundle-one and
http://theionage.com/products/iaf020-ha ... battlesuit as Paladin/Errant/Lancers and Castellan/Crusader/Barons respectively.