Yup, like Jeff stated in some recent bombcast, that thing in particular where low level players can't even damage higher level enemies is particularly annoying to me.
I think Defiance did some really interesting stuff with that at launch, where leveling up only gave you more ability points, but all the gear had same stats for all players - a new player's machine gun would do the same amount of damage as a level 3000 guy (Defiance has a really incomprehensible level system with a cap at around 3000 or so, but you gain about 20-50 levels when the experience bar fills up, and you randomly go up in level as you do stuff), but the higher level guy would get bonuses to proc special status effects and stuff like that, thanks to the abilities they had unlocked. Seems like that system wasn't popular among people though, since shortly before the game went free to play, they switched to level based gear. Still not quite as ridiculous as other MMO's, since you can always damage higher level enemies, but a level 10 gun does about 1/5 the damage of a level 3000 thing, and if you take on a way higher level enemy, you're generally dead if you're hit twice.
I hope that more MMO's will try to play around with this stuff, maybe skip leveling altogether, since as you say, it really only gets in the way of what MMO's should be about.
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