[Suzerain of Sheol]

Well, what I mean by level scaling is, you know how in Oblivion, you won't see a Daedric item until you're level 17(ish)? In Morrowind, certain NPCs had Daedric or Ebony or Glass or whathaveyou items, regardless of level; they didn't scale to the players' level. If you could kill them, the stuff was yours.

Same thing for dungeons. The game didn't care if you were level 3. If there was a Nether Lich in there, there was a Nether Lich in there, better luck next time. And if you could sneak past, or overcome the guardians, the treasure was yours, regardless of what level you were.

So, basically, what I'd like is a mix between the two, where low-level dungeons scale up a bit so you don't wind up getting bored with how easy they are, but keep the high-level dungeons around for some brave and daring exploration.

NPCs on the other hand, I think should be like Morrowind. I don't want to see every orc walking around decked out in full Daedric gear. That sort of equipment should only be worn and used by NPCs who would logically have it in-story.