Generally I tend to do Watcher's Keep right after fighting Yaga-Shura. You tend to breeze through the early levels & get challenged by the later levels. Plus, it gives you a good break in the ToB storyline, gives you a good chance vs. the Tactics additions (The Ritual, Poison encounter), & gives you access to a store right when you need one (w/o backtracking).
It also seems to "fit" well with all the upgradeable items you find - you can warp to the Pocket Plane & construct many of the items (& rest!) as you're going through the Keep. The XP you get also makes a big difference at this point (as in, if you'd done it before, the encounters to that point were probably easy - if you don't do it now, the next few encounters may be *really* tough).
It just seems to fit all around right after Yaga-Shura, IMO.
- Imrahil
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