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The main advantage to starting one race over another is that you can bump a starting stat up to 20. For instance, H/O's get a +2 to strength. You can add 8 points to that and have it at 20. Halflings get a +2 DEX, so you could start a Halfling with DEX 20.
Favored class only applies if you take on a second or third profession. For a character with only one class, the "favored class" is not considered at all.
Nightowl2
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