Communication Issues
Most familiars can't speak languages (Ravens, Parrots, and Thrushes can). They can communicate telepathically with their master, but not being able to talk to the rest of the party or NPCs that aren't the same type of animal would present some difficulties.
Class Levels?
Normally, familiars don't gain levels (or hit dice) on their own. As their masters gain levels, they gain bonuses spelled out on the familiar page. Things like increased natural armor, intelligence, spell resistance, and the ability to deliver touch attacks for their masters spells.
If your player isn't gaining class levels, they will be severely overpowered by almost everything else, as they're really just an extension of another character and not their own class.
If you do let them have class levels, you could wind up with a Wizard whose familiar is another Wizard, which would be... interesting. The primary problem in that case is if you would stack the familiar's bonuses with normal class levels? On top of that, you've got a party member that's a house cat, which would present some unique challenges in acquiring gear.
It's not impossible, but it would require some thought.
House Rules
To get what you want, it might be easier to throw out some of the familiar rules. You could do something like have two PC characters where some kind of accident happens, and one of them is permanently polymorphed into an animal and gets linked to the other character. Give them the relevant familiar special abilities (telepathic link, scry on familiar, etc), but throw out the familiar stat bonuses and treat the character as a PC in the relevant animal form for those things instead. Also let them retain speaking ability, unless the PC wants to lose it. Not being able to interact with most PCs or NPCs at all can get very restrictive.
That's going to get your players what they want without leaving one of them with significant weakness in terms of how they can interact.
This is the general case. Chapter 9 gives rules that tell what you need to do when a encounter requires the characters to resolve their actions within combat.
There is nothing that forbids a referee to apply any or all of the combat rules while the characters are exploring a dungeon or moving around. But there is nothing specific either so the referee has to fall back to the general rule of How to Play as described on Page 6.
- The DM Describes the environment.
- The players describe what they want to do.
- The DM narrates the results of the adventurers' actions.
The effect of readying a action is that the player forgoes his normal action in favor being able to use his reaction to do a specific action under specific conditions. If the conditions do not occur by the start of the player's next turn then it is effectively lost. This especially important in case of casting a spell.
Keeping a spell ready outside of combat is not practical as the caster will quickly lose all of his spells before an encounter. Readying a bow or another weapon is more practical. So lets look at that situation.
A typical character gets a movement and a action. This action can include a dash which increases the character effective movement rate. So the first effect is that character can't dash and keep his bow ready at the same time.
Now we have a party moving slowly and the character has his bow ready. Perhaps with a condition that I shoot anybody who attacks the party. Remember the person doing a ready action has the option of ignoring the trigger. The party enters into a combat encounter.
First off what if there is surprise? On page 189 it clearly states that during surprise no character or monster can take a move or action during the first turn of combat if there is surprise. Furthermore it says that those who are surprised can't take a reaction until that turn ends.
Since you determined the initiative order at the start of combat. This means the person with a ready action will lose if they are surprised. During the first turn the initiative will eventually pass to the surprised character who is unable to use his reaction until the end of the turn, and is unable to take any actions on his turn.So in my example the character with the ready bow is unable to fire.
If the character isn't surprised then having a Ready Bow (or weapon) could be a help as the character can take his reaction immediately at the beginning of the turn provided that the condition is met.
The rules doesn't address this specifically. But it does have an example of movement with stealth checks on page 182, specifically moving at a slow rate of speed. It would reasonable to rule that if a character is moving slowly they can have a ongoing Ready action. However I would also rule it is one or the other. Either you moving slowly and effectively taking the Hide action to make a stealth check, or your moving slowly and effectively making a Ready action to be on alert for something.
The Ready Action and readied spells
A readied spell require concentration with no time limit specified. All good except six seconds later when your turn comes you have to take an action. Your Ready action no longer applies and you have to take another Ready action. The way the rules read your character action status resets at the beginning of his turn.
What happens if you have a readied spell? The rules don't specify. Thus leaving it up to the referee to make a judgment call.
- The spell is already cast, if the conditions of the ready action are not met the spell dissipates. This is because the only option outlined in the Ready Action is to cast a spell. To hold over a readied spell is not given as an option. This in my opinion is what the literal reading of the rules means.
- The spell is already cast, if the conditions of the ready action are not met then player has the option to renewing the ready action. In my option this is not unreasonable and reflect that the condition of maintaining concentration is not given a time limit.
A case could be made for both which one prevails depends on the referee personal view of what happens to the spell energies when it is readied. Is there is a time limit? Or it can be held indefinitely as long as concentration is maintained.
Best Answer
From a roleplaying perspective, the problem you'll run into with this character is that if she's actively involved in combat, ripping dudes apart with spells left and right, the contrast between her and her familiar will be hard to play up. Plus, familiars are never going to be as powerful as, say, animal companions, and so a character based entirely on a combat familiar is probably going to feel weak and become frustrating quickly.
If you're more interested in pushing this character concept to the limit as opposed to having the most powerful familiar possible within the RAW, you could always re-skin the touch attack for spells as the familiar itself casting the spells. From an in-game perspective, the witch wouldn't have to be a witch at all, just a girl who found and bonded to this insanely magical creature that runs around and immolates things while she picks flowers during combat.