This discussion is a re-think of Arneson's notes from his first fantasy campaign on the topic of monster player characters. By re-think I mean looking at the general principle rather than the specific formula Arneson gives.
" There is no reason that players cannot be allowed to play as virtually anything, provided they begin relatively weak and work up to the top, i.e. a player wishing to be a Balrog would have to begin as let us say, a "young" one and progress upwards in the usual manner, steps being predetermined by the campaign referee. " Men & Magic, 74:8
In the section Titled "How to Become a Bad Guy" (pg 78 of the 1977 edition, p52 0f the 1980) Dave Arneson tells us that the "facts" he's about to give us on "bad guy" monster characters were specifically for "small group...Hero Type" monsters.
Nothing is said at all regarding large group monsters.
Likely, this is because "large group" monsters - aka "normal" types, need little or no new rules. They can and should be treated just the same as the "large group" monsters that are already player character types - I'm referring here to elves and dwarves. Similar, low Hit Die tribal monsters, like orcs and goblins and what have you, can be treated the same as dwarves or humans, more or less, and be played as any of the usual classes you allow. Tweak as you please, but definetly have non-heroic monsters progress in classes exactly the same as men, or elves, or dwarves.
It is only heroic type monsters that need special considerations beyond the normal class system. Those large hit dice creatures - the Balrogs and the trolls and the ogres etc. present a special case. Here is where Arneson tells us to start:
"...divide all HD by 1/2 (AC and the rest stays the same). "
At face value, this isn't very practical. If you want to play a 13 HD Herex (giant insect), as you well might, starting off as a "first level" 6 HD monster is wonky at best, a game wrecker at worst.
So here's where I want to start throwing out some specifics and just look at the principles.
If a hero is 4 times the strength of a normal man, then shouldn't a 1st level fantastic "hero-type" monster also be 1/4 the strength of usual monster? That would mean dividing HD by 4 instead of 2 to get the base, starting HD, and that is certainly far more workable. Our Herex will now begin life as a 3 HD character. Powerful compared to a human, but not outrageously so.
Let's look at what Arneson says next.
" To progress to the next level (which in Blackmoor meant getting 50% more HD per level, although our combat system did not really use HD). To figure out when you got to a higher level, you took the creature's Hit Dice (whatever it was on that level) and AC and multiplied by 1000 for the points needed to progress to 2nd level. After 2nd level, the creature would simply need 50% more points for each subsequent level: 2000, 3.000, 4500, 6,750, etc. A creature could never become more than ten times as powerful as its 1st level type."
The formula Arneson gives here for XP is nonsensical. I won't go into why but the gist of it can be found here LINK HERE
It can be made workable if you reverse the AC numbers so 9=2, 8=3, etc., but whether you try to follow this formula to come up with the XP requirements or create them through some other means, what is most important to note here is that Arneson is talking about RACE AS CLASS.
The principle here is that all hero-type, small group, fantasy creatures are a CLASS unto themselves, and each one must be handled separately as a new class by the referee, with its own custom XP chart and its own power progression.
Arneson then tells us, by way of example, to have a look at Richard Snider's dragons found in another section of the FFC. (page 83 in the 77 print) There are 6 dragon types listed there and each type has 10 levels - apparently a reflection of Arneson's never "ten times more powerful" rule. Snider's dragons are not meant to be player characters, so there are no experience points given, but it would be easy enough to create an XP table to go along with the dragon level table.
There's not much point in reproducing the dragon stats here, but what we do see in them is an increase in HD, in the damage and range of their breath weapon, in the speed of flight, and in size, with each increase in level.
That progression is all custom designed by Richard Snider, and that's the lesson really. Any monster, even a dragon can be made into a player character. For tribal type, low hit die "normal" monsters they can simply progress in the normal classes, but when it is a fantasy creature, a "small group Hero type" the dungeon master will have to design the level progression themselves on a customized basis.