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First, without a more concrete example of what you mean by "power differential", I feel like I'm reading a distinction without a difference. Is there a distinction between a power differential and a leveling barrier? Probably. Is there a difference? Not that I can see.

For instance, suppose I sign up for an MMO that my friend has been playing for the last year. He's deeply immersed in the storyline and events of the world. I arrive, dust off my bags, and look around, awed by my surroundings. He gives me a helping hand - using his fiscal power differential to assist my weakness. We move on adventuring - I have questions: he can answer them. This overcomes a barrier somoene else might face: a lack of knowledge or understanding. We group up to go killing: I get little gain from it, because he's "doing things for me" - mostly I gain from understanding so when I return, I'll be equipped to handle things myself.

If this is what you want to preserve: 1) I don't see where it's being hindered today; 2) With regard to where it is being hindered today, I don't see how your approach is fundamentally different. If game designers want to 'force' players to progress incrementally (by, say, stopping cash transfers between characters outside a given level range that exceed a certain value), then they disagree at a philisophical, not an implementational, level. Which brings me back to my point: I get the distinction--I don't get the difference.

With that being said, let me breifly say why I like levels--and I'm mostly stealing from Thott, because he already said it so well. In fact, let me copy his thoughts:

Why do levels exist in a game at all? Lets consider the early game of most any level based RPG. Generally the player starts at level one, walks outside, and starts killing mobs around his level. The level one player can't travel very far, because mobs quickly become far too powerful to defeat, and happily eat level one players that wander out of their pen. The character is thus confined to the newbie areas, where there are mobs that he can kill. After an hour or so, the character reaches level 2. Now the area the character can kill in increases. After another level or two the level 1 mobs are no longer worth killing. By this point, the character has completely left the area he was killing in before, and is killing in a new area. Elapsed time: about 10 hours.

What if there were no levels? What if all mobs were level 1, and all players were level 1, and never advanced? There is nothing preventing the player from leaving the newbie area right away. Instead of 10 hours in the newbie area, the player spends 5 minutes there, then travels to the next area. And the next. And the next. Instead of taking 40-100 days /played to explore everything as it did in original Everquest, it would take at most 1.

Exploration done so easily has little value. Everyone would see Nagafen and Vox ["boss" creatures] on the first day, and since Nagafen and Vox would be level 1, they would easily be killed by whoever felt like walking there. There would be no sense of accomplishment, no sense of wonder, no anticipation and desire to see these rare places, because they wouldn't be rare.

Add levels and suddenly the game is far more compelling and interesting. Levels also add another dimension: replayability. This isn't just playing a character up from level 1 a second time, this is visiting the same place visited before, but at a different level. The location is unchanged; the monsters are the same level, the zone has exactly the same geometry...but it's fun, different, and exciting, because the player changed.

It's the player changing the makes the world vibrant and dynamic, not the content itself.

UO had no level system, and very little progression in their skill system. There was thus little barrier to consuming content, making UO a short term game. The long term selling points are PvP and Community, both of which are nice, and both of which are worthwhile. There are plenty of games (FPS) that are pure PvP. There are plenty of things that are pure Community (IRC). Both approaches are compelling to the people that enjoy them.

Levels (or a good substitute) add a great deal to any game. The key points being the limiting of consumption of content (and this is far more than just saving development time, the wait and anticipation is often more enjoyable than the actual consumption, true entertainment comes from within) and the game world as a dynamic place through the change of the player.