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Part of the "trap" of levels is the player's sense of achievement related to leveling up. "Ding! I hit 40!" It's an alluring trap. You look at your exp bar and can work for a night or 2 or 3 and work towards a specific and visible goal and see your progress and feel that sense of advancement and achievement.

I've longed to see a game where the core concept revolves not around levels but rather around attained abilities. For example instead of grinding from 35 to 40, you would engage in a series of quests or hunts that offered a reward. The reward would come in the form of selecting a new ability perhaps. Choosing the ability helps define your character (perhaps in ways that break away from the enforced archetype systems). Now, with that new ability in hand, you can handle slightly more difficult encounters.

The ability does not come with an automatic increase in your AC and HP and 5 stat points to spend. It's not just a disguised leveling up. Rather you had to choose from a set of abilities. Perhaps you chose a defensive ability. Perhaps you chose an offensive ability, or a team support ability or a personal advancement (such as stats).

Via this you direct your character on its own path through activity that is not tied to a level based system. You retain the ability to group with anyone you wish, knowing that some party members may have greater or lesser abilities depending on their experiences. One can easily visualize a number of simple system that identifies "younger" characters from "older" characters so that you can seek out those of similar overall ability levels.

One of the problems that arises from the removal of a level based character system is the balancing of difficulty with reward. For the seasoned veteran, wading solo through a quest oriented towards a team of novices would need to be controlled from becoming an exploit and also from the "powerleveling" (or in this case is it PowerAbilitying?) aspect. The solutions for this will have to be married to the way that abilities are given and encounter difficulty is structured.

The conceptual effort related to building a construct to accomplish this is part of why we see cookie-cutter MMOs. When one can point to the various games with level based systems and say "That works", it is difficult to justify to the suits that your game needs to strike out into relatively uncharted waters. The folks staring at the bottom line will nearly always back the play involving "proven" techniques even when those techniques are outdated.