I've been doing a sort of weird hybrid E6 campaign for the last three months or so. Here's the scheme:
Party starts at level 4, can take up to 3 LA (so would start with one HD).
Characters advance until they have 6 HD as per normal (so that would be 9th level for someone who started with 3 LA).
Characters may then buy feats (2500xp) or may begin to buy gestalt levels starting with their first level. The cost of this is as if they had continued to level up normally, so a 3 LA 6/6 character would be at ECL 15 as far as xp costs AND xp gained from combat. The consequence of this is that LA and so on don't penalize you forever, but you do earn feats at a slower rate than the rest of the party due to the reduced xp from combat. Obviously if I stayed around CR 8 encounters, the ECL 15 guy would be earning 100xp here and 100xp there while other party members would be earning a feat a session, so I use a slightly normalized xp chart and a number of flat xp awards for plot stuff.
I'm also using Advanced d20 magic, which replaces Vancian casting with a 'roll a saving throw to cast a spell' sort of mechanic. Level 9 spells with no costly components are around DC 51, whereas level 3 spells are DC 30 and level 1 spells are DC 20. You can do various things to get bonuses (using a verbal component is worth +5, using a focus is worth +2, spending a full round action to cast is worth +5, spending XP on the spell or gold or a long time or taking backlash also give bonuses ...). When a spell is cast it causes nonlethal damage to the caster which grows weakly exponentially with the spell level, so it starts at 1d6 for a 1st level spell and gets up to 16d10 in the case of something like Wish. You do need to have the minimum stat of 10+spell level to cast a given spell, and with no stat boosting items and only one +1 from level, that means that someone who wants to cast level 9 spells in this campaign needs to start with at least an 18 in that stat.
It's also hard to maintain multiple spells at once in this system, so casters can't layer buffs so much (its an escalating Concentration check that goes up in DC by 10 for each spell currently up)
As a result there are two major limiting factors to throwing around very powerful spells trivially in battle: cast something too powerful and you risk knocking yourself out or even killing yourself. Secondly, you're going to have a nontrivial failure chance when you do something beyond your means, so if you don't take the time to do it well you could end up wasting several actions setting up for something that eventually doesn't go off. Double drain on a failed casting attempt combined with a higher failure rate makes this particularly brutal when you overreach. So the big spells are available but usually only when the party has time to set them up and do a day-long ritual, or if they're willing to blow 2000xp for the +20 casting bonus to pull it off.
I've encouraged Book of Nine Swords and custom maneuvers to help the melee people keep up with casters in this system, though the gestalt levels mean that most of the party is in one way or another both fighter and caster of some sort (we have a very complicated Marshal/Paladin/Sorceror/Wizard fellow, a Cleric/Crusader, a Ranger, a Bard, and the exception a half-dragon Monk who puts out the most damage of the party by far)
The raise dead/etc spells are banned for plot reasons, but in place instead of 'dead at -10' its 'begin taking Con drain at -10 and dead at 0 Constitution'. Additionally, save or die spells allow the party one round to cast a healing spell on the victim to have them stabilize at -10 rather than die. Obviously some encounters are still very nasty with this system (Con damage poisons, things like shadows which kill via strength drain, etc).
Right now the party is ~ECL 8, and I'd expect them to do reasonably against a CR 12 or 13 encounter. I have a particular CR 20 encounter in mind for the finale which they should have plenty of information to prepare for. I think they'll be able to take it within this system despite not having more than 6HD if they plan for it appropriately. SR and HD-dependent spells like Cloudkill, Blasphemy, and Enervation (Maximized empowered enervation is kill on touch for example) are the major sticking points with the system I think.
I don't get the impression that the lack of stat boosting items or better than +2 resistance, weapons, or armor is much of a hindrance for what its worth. I suspect that AC will be a losing game for the party as the campaign goes on, so it will be more of a matter of finding ways to soak up, evade, or heal through hits (Displacement, etc). I also think that they won't have much trouble hitting humanoid foes but may need to adopt a policy of true strike and touch attacks against large monsters who have a lot of natural armor.