I am still trying to figure it out completely, but what I think I understand is this:

We all know that there is the character level and your class/profession level. So if you change your Rogue at Level 8 to a Mage, you are still at Level 8 (with 7 levels as a Rogue), but your Mage is Level 1. Which means you learn level 1 Wizardry spells.

The same happens if you change this very Mage at Level 15 to a Priest. You now have a character that did 7 levels as a Rogue, 7 levels as a Mage (so he probably has learned some level 3 Wizardry spells), and now starts his 1st level as a Priest with level 1 Divinity spells.

On the other hand (and please correct me if I'm wrong here), if you change an Alchemist at level 2 to a Ranger, you don't have to wait until level 6 for more Alchemy spells (because Ranger is only level 5), you get them at level 5 already, because you've had Alchemy training on your very 1st level as well. This could get quite complicated if you for example (and for whatever reason) change an Alchemist to a Mage after a few levels, and later back to a Ranger.

For the Bishop it's complicated as well (and I'm not sure on this one either). He learns all schools, so if you you change your Faerie Mage at level 3 to a Bishop, you have a Bishop (skills provided) with access to Level 2 Wizardry spells, but only Level 1 spells from the other 3 schools.

Is this all correct? Are there any other edge cases you can think of?

Slightly different topic: If you change your Bard to a Rogue once his Music has maxed out (which is quite a common class change), do you suffer any disadvantages regarding instrument handling? I mean, this ex-Bard SHOULD be able to use his Music skill without restrictions, but I've also heard otherwise. Could anybody clearify?

Your example of Rouge/Mage/Priest is more or less correct, but there is one quirk. For spells that belong to multiple schools, you get to add the caster levels from all the classes with access to that school. This means that, assuming you don't change class again, the character will be able to learn Set Portal at level 18 and Banish at level 22.

The Alchemist to Ranger case should work exactly like the Priest to Lord case. Specifically, you lose the ability to learn spells from leveling and raise your magic skills until you reach level 5 in the new class. (I am not sure about whether spells can be learned from spell books in this case.) I am planning on changing my Priest into a lord at level 12, and she won't get any more Priest spell advancement until level 16. (On my first playthrough, I did Priest->Lord at level 15, and it took level 19 for his spell casting to continue to advance.)

Note that caster level also affects your ability to penetrate magic resistance, as well as your ability to cast high level spells at high power levels. (To reliably cast a spell at a given power level, your caster level needs to be at least the minimum level to learn the spell plus 1 for each power level after the first.)

The Bishop case, I believe, is accurate. Note that that bishop will, given enough Realm skill, be able to cast level 1 Wizardry spells at power level 3, but will be limited to power level 1 for the other spellbooks.

The whole idea here is that casting level stacks for spells shared by classes, but the first 4 levels of hybrid class

One other edge case: If you have an Alchemist who knows at least one Mental Magic spell from a previous class, she will be able to improve her Mental Magic skill, even though there are no Alchemist spells in that realm.

The one problem with the Bard->Rogue class change is that your caster level stops improving. This affects your ability to penetrate spell resistance, and unless your Bard level is at least 24, there will always be a chance of 7th level effects failing when used at power level 7. Gadgets work the same way (but using Gadgeteer level and Engineering, of course).

Strongly recommended for detailed info on topic: http://wolfie.wiz8.de/
at least check the links in section: Wizardry8 SpellsWhile i have no ingame experience with all instruments, as i usually dont change classes exept for small parties,
there is no intrument in Wiz8 with a class or race restriction.

Sorry but they do have class (bard) levels to play them in W8... a bard lvl 18 will play any eg, lord level 1 and bard level 17 cann't play Hades Harp because he needs one more Bard level.

full list = http://www.zimlab.com/wizardry/recovered/flamestryke/wizardry8/itemsw8/bardinstr.html

The instrument may require a Bard level, but it doesn't actually need to currently be a bard. The Lord with 17 Bard levels in your example can still use the Dulcimer of Mending, for example.

This is unlike Wizardry 6 and 7, where most* instruments require that you actually be a bard; being a former bard with music skill isn't enough.

* I believe the Cornu of Demonspawn is an exception that most classes can use.

The Bard to Rogue character

Gains;
Backstab attacks, Locks and Traps skill growth bonus

The ability to wear/ use any special rogue equipment such as weapons or armour that has "rogue or Rogue only" listed in the stats i.e, Thieves Dagger

Can continue to use all skills at their current level but will only progress in any skill that a rogue has eg, lock picking & bow continue to grow because a rogue has them… any instruments (that you have the minimum levels to use) remain available.

Losses;
The ability to wear/ use special Bard equipment such as weapons or armour that has "Bard or Bard only" listed in the stats i.e, "Ring of The Road" +20 str is Bard only and can't be used but "Cape of Stealth" +20 stealth is Bard and rogue so that’s fine.

The ability to progress in skills that a rogue doesn't actively have eg, the Music skill stops improving.

The bonus resting and communication skill growth are Bard only so lost.

The above are facts but how you use them to build your character and party will largely depend on individual play styles and the synergy between Bard, Fighter, Rogue and Gadgeteer has many options for the players that like to fiddle with character development. I agree Bard music stops progressing but the early game advantage of casting powerful 'Shrill Sound' before reaching Arnika or the ability to endlessly cast free 'Heal all' out of combat is well worth the cost of admission ime

For my personal experience the Bard to Fighter has more appeal because the stamina demands of instruments are restrictive plus having my Mook go berserk with her Giant sword from the second row after casting a "heal all" is something I find satisfying.

If my Gadgeteer wants to power level her lock pick skills then the fact that a Rogue (unlike the Bard) still progresses in the modern Weapon skill takes much of the sting out of dualing… a Faerie armed with two "Sprite's Dagger" and the "Mystery Ray" would seriously consider it.

p.s. she would of course also give her Omnigun Mk6 to Madras in this scenario because it is two levels better than his.