2 types of level:
1) general level (affects stats like hp, strenght etc in general)
2) Skill level (affects a certain skill, and the corresponding status)
Experience should be gained upon succesfully doing something (like: healing 100HP to some-one would give you 1exp in healing skill and 1 in general) for combat this is almost the same like this: monster 100 hp you deal 30 damage, friend deals 60, some random player deals 10, as soon as the monster dies, you get 0.3 exp for your sword skill, your friend 0.6 for his bow skill, and the random player gets 0.1 for his fire-magic (and offcourse the same amount of exp to general)
note: the experience is only gained after the monster is dead, so no 1 slash and teleport out to get exp, the monster heals completely as soon as all players near it are gone (by teleport or death) the way to distibute exp whould allow people to team up and help, yet get their fair share, and prevent kill stealing situations.
Now on higher levels you can eighter increase the amount of exp needed for a level, or decrease the amount gained.
Also I think you should not limit levels to (lets say) 99 because this will partially block the expension of your character, so I whould suggest that levels should increase in power unlimited, BUT that getting levels above 30 whould be a little bit more dificult, above 60 whould be hard, above 90 whould be even harder, that way players who play 24/7 should be able to continue to grow, while the differences do not get enormous straight away, it is true that some players will be powerfull, but you can always team up and get 3 players with an easy to get skill level 30 to kick the level 90 player.
I do realise that in the end there might be level 150 players, who whould be as strong as 5 (relatively new) players, but since there will be tons of those I think it shout not be a problem and balance out nicely, provided that getting higher skilles gets more and more dificult (so that even people who play 60 hours a week whould not get more then 1 level a week at high levels.
Also because you keep sword and bow and magic etc skills seperated, you can not get an enourmous healing skill by just slaying a dragon and direct the exp to the healing skill, this way, if you want to be good at other skills, you will have to use them to, while (especially with new skills) you whould almost not increase you general level.
ok, I hope I got it typed out understandible enough
any reactions from players and / or dev\'s about if this can be implemented and what you think about it are (as always) welcome