AL Levels

There are two competing schools of thought to consider. The first is the "play to cap and park" system, and the second is "reincarnation". The latter turns the entire game into the end-game, making more content relevant; while the former requires an exciting and ever-improving end-game and probably routine level increases.

What I'm going to propose is a sort of "Best of both worlds" approach, which rewards each style of gameplay without making both mandatory. We further need to ensure that we not stratify the game badly, thus dividing the player-base.

Proposed Idea

The game is divided into two sections: the Class section and the Legends section. There are 18 class-specific levels(where you receive special perks based on your level) and 4 Legend levels where you have access to the same legendary perks as everyone else.

Theorycraft for Reincarnation

There are 18 "class" levels and 4 "generic" levels(for end-game). You can only accept the end-game challenges while at 19-22. As the game ages and content is added, some levels can be added(say increasing the "class" levels to 20 and end-game to 5), but it shouldn't change much to scale prevent power-creep. Some creep is expected, but ideally each new expansion shouldn't be about "ooo, look at the bigger numbers!"

Let's Talk about Reincarnation

Let's say for the sake of argument, we go with a reincarnation system. This resets your experience to zero but lets you keep all your items and gives you a moderate buff. Leveling back to "class" cap should not take long even for casual players. Probably a good approach would be to make each subsequent "life" require less experience instead of more. The logic here is that it gives players the benefit of "the whole game is my end-game" without badly dividing the player base. If I know I can get back to raiding and playing with my friends with just a few hours of moderate gameplay, it's easier. It would further promote grouping as friends can "catch up" to each other.

So what kind of bonus should it give? Nothing earth-shattering. One idea is to provide something really simple, like an extra stat point at character creation. The thought-process is that reincarnating shouldn't be a huge deal. Another idea is to let players remove level requirements from items, thus giving you over-powered gear at lower levels.

On Difficulty Curves

To prevent bad stratification of the player-base, the "class" portion of the game should not restrict level ranges too badly. So, for example, a level 1 and a level 6 should be able to group together without the level 1 being completely helpless. How to actually do this is kind of a challenge, but ultimately we really want no more than 4 "level ranges".

Another idea is to separate out the "dungeons"(games) from the open-world exploration areas. In a game, a character's power can be scales so they're all about the same, while in the open world there will be regions lower-level characters absolutely cannot survive in.

Another other solution is to front-load a lot of the "power" of the classes and make the first few levels easy to knock out solo in a couple hours. You "build" your character and play alone for half a day or so, and by the time you're done, you're strong enough to group with almost anyone.

Top of the Head Ideas

For now, let's consider the 18/4 idea. You get 18 class levels and 4 "legend" levels(for lack of a better term). Ideally, you should be able to make level 6 in about 8 hours of moderate play, and 18 in maybe another 24. This would be for first-life characters.

Second and Third lives require 30% more XP each(so 30% for second and 60% for third) but on the 4th it goes down by 10% for each additional life to 80% of first-life. This means that the 9th life takes the same effort as the first, and the 11th takes just 80%. Additional perks or rewards could reduce this further, but this encourages grinding out extra lives since each life makes the next one easier.

Further, if we have enough XP available in the game, there won't be a lot of complaints.

The reincarnation system does need to be "gated" in some way, but keys need to be available from the start. A simple answer is to make reincarnation "cost" some item that requires grinding to get. Maybe it can only be earned at legend levels; and at a set interval. This would encourage players to stay legendary for a while to bank these things, then use them to earn a bunch of lives in rapid succession. This is my favorite idea so far.

If we go with the notion of lateral expansion, we also have the opportunity for 3 different reincarnation mechanics right off the bat.

Theorycraft for Cap and Park

Ultimately, I see this answer as a dead-end. No matter what fun systems you introduce, there will always be a certain class of player for whom PvE is the only thing, and they will be very uninterested when they reach max level/max gear and have nowhere else to go. Alts are one solution, but depending on the grindyness that may or may not hold some player's attention.

I think if we want to support a deep multi-classing system, then a cap and park solution will never work. You HAVE to have a reincarnation mechanic, otherwise the game just becomes about building tons of alts, and not a lot of people will enjoy that.