Well, you're entitled to your opinion. However, you should remember that all demi-human races have various racial abilities that humans lack. For example, elves get bonuses to hit with swords and bows even though they are limited to 7th level as fighters. Add on a 90% resistence to sleep and charm and that's pretty good, imho.
With abilities like these it's very reasonable, imo, for humans to have unlimited level progression. A demi-human of the same level as a low- to mid-level human will have certain advantages, after all. Besides, I don't see balancing as meaning making things egalitarian. It's a balance because after a while your elvish M-U, while still retaining his racial abilities will simply be surpassed by his human companion in the spell casting department.