Kazuma's Alter is called "Shell Bullet", a harmonic type Alter (meaning that the matter he's transforming is mainly his own body) and consists of three forms:
First form: Consists of a metal alloy that completely encases his right arm, all the way up to his shoulder, and three curved, red fins that appear on his right shoulder blade. In this form, when one of the fins disintegrates, it propels him forward (or upward) at roughly the speed of sound--he can easily dodge bullets, etc. In the anime, he calls out the names of the attacks (Shocking First Bullet, Annihilating Second Bullet, Exterminating Last Bullet), but I probably won't ever have him do that in-game, because, frankly, I always thought it sounded damn silly. XD He can use his armored fist to either punch something (or someone), or slam it into the ground and launch himself upwards in order to dive-bomb his target.
Second form: In this form, the fins on his back are replaced by a propeller-thingy, and he can still move at great speeds, and even fly for short distances. The armor on his arm is much thicker, and completely replaces his arm instead of just covering it. A sort of metallic half-mask also forms around his right eye--but as far as I can tell, this just seems to be decorative and doesn't really do anything. His second-form attack is called Shell Bullet Burst, and is much stronger than his first form attack. He doesn't punch with his fist (although he probably could) but uses it like a gun or rifle to fire his shell bullet, which seems to be a sort of energy blast type attack. Unlike his first form, which is used up after three attacks, he can use his second form attack an infinite number of times--although it takes a pretty hefty toll on him after he drops his Alter.
Third form: Quite frankly, this is one of the stupidest looking things I've ever seen (what the hell were those animators smoking? o_O), but this form is undeniably powerful. The alloy now covers/replaces his entire body, and he has two--count 'em--Shell Bullet attacks, one on each fist. This attack is called Proud Fist in the anime, and is even more powerful than his Second Form attack. A tentacle/tail/whip looking thing replaces the propeller, and he uses this to propel himself into the air. In this form, he's able to fly for much greater distances--and is even able to enter space...go figure; I believe his speed also increases in this form to something approaching light-speed. Also, his hair gets really long, taking on the appearance of a lion's mane, and a metallic mask forms over his entire face. In this form, he's virtually indestructible--although, as with his second form, this takes a toll on him after he drops his Alter.
Other things of note:
Un-Altered: Kazuma's a pretty fair street-fighter. He's probably a little stronger and faster than normal, but nowhere near as strong or fast as when he's Altered. Most of what he knows about fighting--Altered, or unAltered--he probably picked up from Cougar--their moves are almost identical. He doesn't get fancy--no super-sparkly martial arts moves, or anything, just down-and-dirty bare-knuckles ass-kicking.
Injury and Healing: UnAltered, Kazuma seems to be as vulnerable to injury as any normal human. When Altered, however, he's Wile E. Coyote: slam him into a mountain, drop him off a cliff, throw him off a plane, run over him with a bus, and he just shakes it off. He can be injured while Altered, but it takes something or someone extremely powerful to do so. In addition, he seems to heal very quickly (in the manga, he can heal himself by will alone), or at least, I assume he does, as injuries he receives in battle don't really seem to hinder him much even after he drops his Alter. In both the series and the manga, Ryuhou slices off his arm--and he just Alters a new one. He can also be stunned/rendered unconscious during a fight, and will lose his Alter. Usually, he's not out for long, however, and will just Alter again when he wakes up, provided he still has enough juice to do so.
Right eye: Despite what my icons show at times, Kazuma has only one eye. He lost his right eye in a fight with Ryuhou about halfway through the series It only reappears when he Alters, and even then, seems to be a slightly different shade than his other eye.
Scars: Beginning with the gain of his second form, scars begin to form on Kazuma's right arm and shoulder, eventually spreading out onto his chest. Later, after acquiring his third form, the scars seem to spread further, onto his face and covering his right eye.
The price of power: As mentioned in the descriptions of his Alter, use of his power exacts a pretty heavy toll on him. After a battle, no matter how difficult or easy it was for him, his arm will constantly spasm and at times is rendered almost useless. After the acquisition of his third form, the scarring and pain involved seem to increase in intensity. This isn't really explained much in the series, but from what they do tell us, I'm assuming that this is because Kazuma's Alter evolves somewhat unnaturally over the course of the anime. I don't really mention the amount of pain he's in much in-game because he rarely mentions it, unless someone asks. And even then, he probably would only admit it to someone he's particularly close to.