Originally Posted by mrfuji3

But either way, it's vastly easier to adjust the single "Experience Gained" equation than adjust every single encounter, considering many properties such as the # of enemies/enemy abilities/enemy hp/etc.

Dividing XP amoung the active party is certainly the obvious solution. And since it has been the norm in tabletop DnD since the beginning, it is also the canon solution.

It does have some problems in a fixed-duration videogame format related to how any non-participating companions level, but those problems are minor.

I don't particularly understand arbitrary size limits on parties in RPGs to be honest. The computational load is clearly not an issue any more ( it probably was at one time ), so it seems to me to be more appropriate to have party size governed by the player's ability to bind followers and keep them happy; with you and with each other ( as in BG1/2 ).

I suppose it might have some unwanted effect in MP, but I find it difficult to imagine what that might be; you would just have more players levelling more slowly.