Looks like a number of people are interested in this. I think I'll split up the proposal. I thought Xael did a good examination of it, but I still like it better as I first proposed it.
I thought I'd add two addendums.
1. The opportunity to take a level of Elite for existing PCs, who are above 1st level. This seems more controversial. I like the idea, and think it could be justified in several ways. For one thing it isn't necessarily more counterintuitive than the increase in power of normal leveling, particularly when multiclassing. Also, for young people, say, age 17, it isn't too uncommon for them to grow a few more inches and put on 20 pounds of muscle by the time they're 21 or so. And of course, people get smarter, wiser and more charismatic all the time. I don't see why it couldn't be done in-game at a higher rate then 1 point every 4 levels.
2. Knight Otu mentioned he thought the proposal would go the opposite way. I hadn't thought of this, buy why not? What if we allowed characters with a lower point buy to jump to 2nd level right off? That would really open up LEW to more character concepts, including ECL races. Maybe if you take a 23 point-buy, you can start as a 2nd level PC?
KO & Nimisgod have been character judges for a long time. It's definitely a tough job, and maybe its time to give them a break. These need not be permanent positions. Perhaps we could get some volunteers to take over for a year, and pick new ones every year after that. I'd volunteer. I don't know that I'd be as good, though, as my rules knowledge is hardly exemplary.