I'd like to propose something that may take alot of work and is open for thought and discussion, I think some devs may not be happy with a change seeing as to how hard they worked on this current Fighting system. But I think it will be beneficial and more fun.
So first part is the easy one, get rid of the concrete level display, it indirectly kills rp by motivating some a bit too greatly to max out their skills.
Second I think we could get a test team to work with the devs by adjusting equipment values and returning to a time when you could use any weapon. (I volunteer to help as a tester if this is considered

Third, with this said system in place I think it would be good to have the old item drop upon death though only dropping like two or three items at most, not dropping the char's whole bag and something on his person. This way there will be the chance to lose equipment in the wilderness and thus opening a equipment flow so things won't be overcrowded with such high level and high quality equipment. This would also encourage players not to walk around with their characters entire horde of wealth on their person.
So I don't think we would change the fighting system THAT dramatically as we should still have the different armor and weapon types. This I would think would bring back a bit of the old illa feel, not to mention it would do good for fighter roleplay and with any luck encourage more rp between everyone because they aren't seeing their levels all the time.