InTheHat was over a short while ago and we were talking about establishing a new roleplaying group. I was looking primarily at D&D 4th ed. or some hacked up rewrite of it when he asked a critical question - Why use a level based system at all?
I thought about it awhile and came up with the idea that the reason you would want to use a level based system is for heroic combat. There are obviously all kinds of systems out there from the extremely freeform (Vampire) to the to the brutally regimented (D&D). These two that jump out at me for comparison because they have such entirely different takes on character power progression and style. Let's say you decide to make a Vampire character and build a tremendous combat twink. You take 2 in Potence, 2 in Celerity and a bunch of points in Melee, Str, Dex and get a big sword. When you fight the guy who built a social character the fight goes roughly like this:
And that's all she wrote. It isn't much of a fight... but if the social guy decides to take you out first then just as you walk out of your apartment you get shot by half a dozen mindcontrolled SWAT police and set on fire. In no case is there anything resembling a fair fight going on. This is obviously pretty realistic in the sense that fights between people where one is very influential and one is a combat specialist are incredible onesided and lethal but has the tricky problem that none of the encounters feel very heroic.
If you want to have the sort of game where players get in many fights and the fights are meant to be obstacles to be overcome rather than life and death lotteries then you need two major things: First, you need tight control over player power levels. Players must be very restricted in how powerful they are in a fight both in terms of minimums and maximums. Everyone has to be useful and effective but nobody can be a one man army. Second you need both players and villains to be tough as hell. Nobody can be allowed to die from a single swipe of a sword and players need the ability to heal themselves very rapidly. Neither of those things is remotely realistic and both require a system highly focused on regulating combat prowess.
The trouble with a level based system is that you give up a lot to get that control over combat prowess. Things like Blacksmithing get linked to character level and you end up in a world where the best blacksmith has to be a person who spends most of their time killing monsters and saving the world instead of the person who spends most of their time blacksmithing! You also end up with social abilities being either ignored or marginalized because so much of the system is focused around maintaining a balance of combat abilities that it can't reasonably represent a range of social connections and skills too.
I was initially looking at working in a large number of additional things into SkyRPG, my D&D rewrite. I was looking at adding in professions and more social rules but I ended up deciding that this was entirely the wrong way to go. I don't want to write a system of professions that rewards heroes over tradespeople. I don't want characters rolling their success when doing every social task or challenge. What I want out of the system is a fun, flexible system that regulates combat prowess. All the rest can be handled by roleplaying and some simple decision making by the GM. If a player's history says that they spent their first 20 years in a blacksmith's shop then they can be a great blacksmith but they can't have connections at the king's court. If a player has a noble background they simply aren't going to be the best fisherman around. A few notes and well written backstories will handle nearly everything that needs handling and the actual system is really there to decide who wins a fight.