Levelscaling should never be used. Ever. Period.
If "limited" (say between 6-8) then you get 'What is the point' as indeed it does not alter your precieved (non-)issue of being too powerful at all, and there's really no reason not to have it fixed.
If going all out, well, we know how awesomely horrible that is, not?
And yes, getting pawned severly because you go in an overleved area is AWESOME, but taken away by cheap RPG's who just get things your level to pamper the player.
Having said that, improvement points:
* That quest with the severed head which pretty much required another quest to fail, which was a one-shot. There are no good alternatives.
* That one area where the badness of Combat XP was so well displayed. You know, the lava one where you could fight (easiest, +15K XP or so), sneak (hardest, nothing extra) or use fire-resistant items to walk on lava (relatively easy to do, but again, no XP). Geez, what path would I take???
* Akin to above point; less combat XP, more XP for doing objectives, progression and exploration instead.
