XPs: What about having "party XP" (because that's what the party has accomplished to date) rather than tracking it per-character? Apart from the dead/alive issue, it would also avoid the problem of hirelings ending up well above or well below the PCs' level depending on when you meet them.
Well, let's talk about that. The basic idea of XP per character is to reward characters for what they actually accomplished. That might sound pointless in SP but it's important for co-op. Only characters which engage in turn-based combat should get XP points for killing enemies.
But that's only one part of the XP and level system. I agree that the whole party sould be rewarded for solving quests (because this is clearly a party engagement).
Another problems comes with companions and henchmen. They should indeed level with you, even if they don't actually be part of the party. This is a "hot topic" already caused almost dogmatic fights between RPG fans but imo the pros outweight the cons. Of course it doesn't make sense if you look at it from the outsight (aka "it's not realistic"). But it makes a lot of sense if you look at it from a design perspective. It's still a game and it should be fun to play it. Not giving companions or henchmen the ability to level with you there would just never be any incentive to change between them after a certain point, as you've said.
