I sent most of the following to Brandon already, but I thought it would be interesting to hear other people's reactions to my comments on the book.
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I think that there's far more good than bad in the book, and so I'm going to talk mostly about what I think needs to be polished.
Overall, I liked it -- about as well as anything I've read lately that isn't Lemony Snicket -- certainly better than several books whose cover art was designed to make me think of LS. There is obviously a market for this sort of book, if all the marketing people are trying to make their books look like they're similar to LS, even if they have nothing much really in common.
The author interjections are certainly a major part of my reaction. I laughed more at them than at the storyline which, while silly, is not often funny if you take my meaning. On the other hand, I think that the author interjections need the most work before it can be published. Several of them say the same thing, mostly about hooks, and though it makes the one that's mostly blah blah blah a bit funnier, I think that there's enough you can say about the writer's craft that you don't have to repeat yourself.
I dislike the first paragraph immensely, mostly because I couldn't tell what person you were going to be writing in, since it seems to shift through all three in the first two sentences. You just can't say, "makes A person stop and think about THEIR liveS" especially after saying, "YOU're about to get sacrificed" and just before saying, "YOU'LL have to take MY word on matters." I personally think that's what put the idea of a first person rewrite into your editor's head. Having said all that, I think that the ideas in the first paragraph are a great way to start off the book, just not quite that syntax.
I was also confused about the author's feelings toward books and libraries altogether. Does he like them? He certainly seems to when he talks about his most treasured possession. At the same time he seems to be anti books and Libraries since they're often the tools of the antagonists. I think that this can be reconciled, for instance by saying that uncorrupted books and libraries are the most wonderful things in the world, and that therefore the tainted ones are the absolute worst. For this age audience, though, I think you need to spell it out a bit more clearly.
I have lots of proofreading comments, which I won't supply unless specifically requested. I'm sure you've got people who can assist with that. I would like to mention that you use the word "Whom" too often. Sometimes, it's just plain wrong grammatically (only use it when you'd replace it with him rather than he), but even when it's grammatically correct, a person like Alcatraz probably wouldn't use it in everyday speech.
As for the names -- Why is Bastille named that? She's not a Smedry, or an Oculator. Is everybody in the Outer World named after prisons? If not, then you might want to reconsider. It's a really good name, I like it, but it didn't seem consistant with what you laid down as the reason for it. You could continue to use it if you gave her some reason to be using somebody else's family names -- for instance, you could say that members of the resistance tend to use those names, rather than just Smedries (chapter 10 by the way). Also, aren't Sing and Quentin Smedries as well? If they are, then I don't think that Bastille would be likely to refer to Levenworth by his last name alone (at the end of chapter 4)-- it would just cause confusion.
I think you should make a joke about looking at the world through rose colored glasses. I was waiting for it for a while.