Two things.An RPG without any sense of narrative essentially negates the purpose of having a GM at all. You're treating a mechanically derived situation as nothing more than a "challenge" to be overcome, and the GM is just AI at that point, and nothing more.
First, early RPGs often call the GM the referee. That's for a reason - the GM was core to action resolution, and the GM was not expected to metagame the action resolution in the interests of "story" (very different from, say, AD&D 2nd ed or classic White Wolf).
Second, gamist play will have a sense of narrative in the sense that events happen in sequence, and a recount of what happened to the PCs is possibe. But the original reason that ToH was written and played wasn't to generate hilarious stories about whole teams of PCs getting swallowed by the green devil. It was to pose a challenge to players (especially arrogant and self-important players). This is spelled out in the intro to the module, and has been discussed at length in Stoat's excellent Tomb of Horrors thread.
I'd agree that it's probably rare to play D&D in a way that makes levelling irrelevant, but I suspect it's not all that uncommon to play D&D in a way that makes levelling a sort of taken-for-granted backdrop to play, rather than the point of play. I think this is especially true of 4e, and certain variant approaches to XP in 2nd ed AD&D and 3E, where XP are earned essentially for turning up and playing the game, and so no particular effort is required to earn them.In D&D the point is to go up levels and get more powerful by overcoming challenges. It's a game, at its core. Running it as a simulation where the player doesn't actually care whether their PC overcomes challenges & levels up is rare, IME. There are other RPGs where success is not the main object of play, but it's at the heart of D&D.