1. I would scrap the level system entirely, rather your character only develops their skills without any inherent level feature.
2. So what about the attributes, Magicka, Health and Stamina? The base values for these attributes are set during character creation and they don't change during the course of the game, except through the use of items, special effects and perks/abilities. Instead your effective level in these attributes develop as you develop your skills, your attacks use less stamina with high skill in weapons, you suffer less health damage with high skill in armor and you spend less magicka with higher skill in magic skills.
3. Perks are not gained by advancing in level, rather you gain them through training and in-game events and they become available once you reach a certain skill level. Some perks can be trained by regular trainers, by simply paying them, other can only be obtained through completing tasks, joining factions and doing services for NPC's. In order to avoid characters having all the perks, your character is restricted to a maximum of perks. If you spend all your perks at lower skill levels across the board you won't have any slots open for the expert level perks, so specialization is a key to effective character builds.
4. During character creation you have a set amount of customization points to spend on traits. Some traits raise your basic stamina, health or magicka, others give you bonuses to your skills, unique traits such as "athletic" makes your character move faster and jump higher, "acrobatic" reduces fall damage etc. Some traits are negative and give you more customization points to spend elsewhere, you can have no magicka to represent no inherent magic ability, you will never be able to cast spells, but you get more points to spend on other traits.
5. Level scaling becomes a hidden algorithm, since it can no longer go by character level, the scaling must instead take into consideration a wider range of the character's skills and perks.
In my mind TES could develop and really set itself apart by moving away from the classic and overused level system of other computer role-playing games and take a fresh, new, open character development approach.

