Representing the different martial arts schools is one of the most important things for me. I don't think superhuman abilities belong in a RuneQuest setting but this is fantasy and magic does exist so elements of the make-believe can find their way into the world. Plus, as combat tends to be a major feature of most RPGs, the martial arts (armed and unarmed) will allow the investigation of national and regional differences.
As for time, most probably 15th/16th century for several reasons. By this period trade with Western nations was established (and I agree that this is something that has been missed in Eastern settings before: the role of traders and missionaries and the interaction of very alien cultures), Japan was emerging from a period of civil war, Japan launched two attacks on Korea and invaded Okinawa to the south (formerly controlled by China), plus a little later the Manchus invaded China and Korea from the north. I can bring this date forward though by a few years.
The Mongols had an influence on both China and Korea but were active somewhat earlier. Whether they exist as a culture on the decline or as a viable threat, I will have to consider. One alternative is to shift the period of Mongol decline to a later date so that it is happening in the same period. This may complicate matters with regard to the Japanese invasions of Korea though. As an aside, I live just a few hundred metres from the site of the second Mongol invasion of Japan. Although the government has reclaimed part of the ocean, the original sea wall marking the former coastline that the Japanese defended is still visible in part. There's a small, but interesting museum here.
Eisho