I read this thread and started daydreaming a bit.
Regarding level scaling I can think of a system based on dice rolls. The system could make a roll for example with d4 or d6 for all enemies, result-1 or -2 to be added to the PC actual level = enemy level. After that adding skills and abilities from a preset pool for them. So there would be differences in a group depending on 'luck' and a combat can be different by playing it again (loading older savegame). The game difficulty level could give a modifier to this roll.
That's pretty much how Oblivion's level scaling worked for the most part: PC level offset was the standard for many if not most encounters. Although the types of enemies changed, the difficulty never really progressed except in the teens where if the player's own levelling wasn't ideal it got quite tough, and the mid-high 20s where the enemy level began to level off.
Equipment types as found both on enemies and in random loot also scaled with the player's level, so again, though its appearance changed, everyone even the most hopeless highwayman ended up using top-class equipment and the stuff from earlier in the game was functionally useless. It eventually got to the point where I just felt "why am I doing this?"
Although I've generally found the smug "Morrowind did it better" crowd to be quite insufferable, Morrowind's approach to enemy levels and general diversity did make for more interesting gameplay and certainly a more varied range of encounters. For a lot of players, overhauls that threw away Oblivion's vanilla levelling in favour of something that was a lot less smoothed out and influenced by the player's progress was a big improvement.
