[DustyPorViva]

I've played online MMO's where the only thing level effected was mainly max health and max mana, and to a minor degree. Stats like strength and such were a constant from level 1 to level 98, depending on your race. However, there were a few skills that could add temporary boosts and such. Mainly what levels effected were how much 'stat points' you got to spend on your class skills, which you could also pay money to obtain. Thus, level 40's could competitively combat against level 90's, even though there was an advantage... and you can never get rid of some sort of advantage to higher levels.

And ya, diminishing returns are always a good route to go when you're dealing with numbers in an online game... if they're done right.