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[singletee]

If I play Overlord as Prince (using cost reduction), do I still choose a card, or does the Prince effect fail when it reverts to an Overlord upon being set aside?

[eHalcyon]

A literal reading of the cards suggests that it works fine. 

> You may set this aside.

You set Overlord-as-Prince aside.  It's no longer in play so it's no longer a Prince, but you continue following the instructions anyway.

> If you do, set aside an Action card from your hand costing up to $4.

You can do that just fine.

> At the start of each of your turns, play that Action, setting it aside again when you discard it from play. (Stop playing it if you fail to set it aside on a turn you play it.)

And you can do that too.  It's not dependent on Prince being set aside;  the Prince itself doesn't matter anymore and is only set aside as a reminder.

So Overlord should remain set aside, not returning to your deck until the end of the game.  The Overlord-Princed card is played every turn just as if it was Princed by an actual Prince.