Rules FAQ
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An opponent's game elements may not be used to pay a cost, which means you can only kneel a character you control. The character does not need to have the corresponding challenge icon. Also, you can choose a character that was bypassed by stealth.
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Max 1 per challenge (as opposed to “limit”) means you cannot trigger Greywater Watch twice in the same challenge, even though it leaves and re-enters play. (See Limits and Maxima.)