Or ... more to the point. What is the point of a leveling scheme when all it does is constantly adjust the challenges to be slightly challenging with rewards that assure the next notch up is ... slightly challenging.
To me the argument for no leveling comes down to what then does determine challenge. With the solo games and the lovely, lovely modding that goes with them this issue has been addressed several different ways. For the Oblivion mods there are basically three schemes:
OOO: A static leveled world. The deepest and furthest dungeons out have the hairiest encounters available to encounter at game start. The idea - the greater the risk the greater the reward.
Frans: A re-leveling scheme that offered options for adjusting mobs and boss strength. More customizable, but the generic settings are that it is more challenging than vanilla scheme where there is always just a slight challenge.
TIE: No leveling. Every encounter is a random roll. You could face a god-like creature and only get an iron dagger as a reward, or beat down a weak goblin and get a magic dagger of god killing.
With the vanilla/native games the leveling is secondary to the skills. The skills are even more primary in Morrowind and Oblivion than attributes. Leveling serves no other purpose in these games than measuring the character power and adjusting the world to provide some challenge. Every once in a while there is a game check for level before offering a quest, but often these are based more on skill level, because in the solo games skill level is the real deal. TES level scaling has been failry broken since Morrowind, but other games do get it right - gothic games for sure felt challenging most of the way through.
By having classes and specifically a set number of skills available then on top of that have the leveling drive skill development - this turns around a rather large part of what sets TES apart from other rpg titles. Perhaps I'm being petty, but I don't think so.
Again the point of the leveling is to set challenge. I've no problem with a leveling scheme per se ... as long as there is a chance that I could encounter more than a slight challenge as time goes on and that this more than a slight challenge took various forms. Again mod variety is my language for this and as overhauls for these games have matured what we see is a blending of the above thee options. Some areas static and always dangerous. Some areas scaled more steep. Some areas just being a wild card.
This slight challenge is further diluted by the nature of MMO encounters. These mobs just stand there and literally you can run right by them without their attacking. Stand 15 feet away and they just sit there staring at you doing nothing. With the ability to ignore any encounter or fully heal between encounter without the use of magics - to me these games (and this one too) are always feeling like a casual gaming experience of leisure. Social gaming. It is like if you can't stand the heat just take space and the challenge is 100% fresh and ready to go again. That bleeds the urgency out of the game and leaves one with nothing to do but the grind.
Right here is a good point: Player skill versus character skill. To kick that horse one more time ... MMO games tend to not really emphasize player skill and so the grind isn't really about increasing player skill and instead is all about character skill. To me, a great game is one where the synergy of player and character skill are a sum force greater than the parts. Where you are locked in the zone. When the game mechanics stick out like a sore thumb then it is easy to cry the game is not balanced (and it probably isn't) or not a good game.
Some how some way there has to be some level scaling. Just how it is scaled where there is challenge and not annoyance is the key.
I still don't see how they are going to pull off subscription though. seriously?