If anything, I think that the limbo between levels is the annoying thing. I don't think that most people need to level up every hour or so if they hit the max level quickly enough or feel like they are powerful enough already.
I rarely play a game without levels and think, "gee, I wish this game had levels so my character wasn't as powerful now so I could be imperceptibly more powerful in an hours time." Maybe some people do, it takes all sorts.
I don't like playing a game at max levels for an extended amount of time. If I hit the max level, I consider it the time to tackle the final challenge of the game. Often I beat games with before hitting max level. I guess we can only agree to disagree here.
That way you still don't get into more trouble than you can handle or expect something tricky only to find out you can do it easily. Isn't that just as bad as rubber band level scaling, except maybe worse as it severely limits the content you can try instead of opening it up?
If you want to get into trouble, you can hit quests which will give you trouble. If you want to be in the dark about how difficult a quest will be, then our desires are different. If the player does his research (in game, not by using GameFAQs), I think he should get a good idea how difficult a quest will be.
Subtle signals are much more interesting than signposting everything with traffic lights. I think that Demon's Souls has a system where players can leave notes for each other in game about what to expect. Useful or misleading.
The signals can be subtle, or even better, the player has to do some (again in game) research to be sure. I do however want the signals to be there.
That's a lot of developer work for a minor player decision that they would probably see as a fail state and reload the game, or write a angry post on a forum for a persistent game.
If the game already features the possibility to become an outlaw by for example stealing enough or killing, flipping the player to outlaw for that event takes no effort. This also means that if the player already is an outlaw, the easy solution can be chosen without penalty. I'm OK with that.
Regardless, I don't consider it viable to allow for multiple different builds, but only some of the builds can finish the game. I understand if that happens when the player gimps his character, but if let's say the player chooses a ranged character, chooses the right stats and skills for ranged combat and then find that only melee or offensive magic builds are viable, I think something is wrong.
If I want to finish the game at level 20 but it isn't mathematically possible until 30 then there is no content I want for my challenge level as I only want to finish the game. I have to grind.
I doubt that's an issue if you're good enough. Most games can be finished at
much lower levels than intended. Very few modern games are mathematically impossible at levels you will reach by just going trough the main quest, with or without level scaling.