I've re-read the manual, but it's not entirely clear and I don't want to screw up my game. If we decide to allocate a gained level to another class, does that cut off development in the old class permanently like in the 2nd edition rules? Or can we gain a few levels in a new class and then go back to the first? (The rules seemed to be better explained w/ BG).

In most cases you can switch back and forth between levels of the two classes. There are some exceptions however. Paladins can only switch to certain classes and then back depending on the diety they worship.

same with monks, for example monks of the old order makes for a monk and thief(?) combo...IIRC [img]redface.gif[/img]

I just posted something on multiclassing. If you see on each race and character building, they will give a summary of which class which you can multiclass too that have no penalities. Like the paladin, depending on which type of palading you take, you can multi class into a fighter or a magic user.

Paladins can multiclass freely only to CLERIC, fighter or mage (diety restrictions apply) - otherwise they can NOT switch back to paladin and gain further levels in paladin.