Not necessarily. After all, why would such a dragon kill a PC that presented no threat? And why would a dragon have a lair that a low-level character could find/walk into? A more likely progression is that characters of radically different power levels will encounter each other, but that the terms of that encounter will be dictated in part by their abilities and it will proceed based on what the two think of each other.
NPCs/Monsters don't have brains, they are intrinsically extensions of the GM's will, thus any judgment being made as to how to proceed is by definition the judgment of the GM, and is at the very least the subject of the GM's biases and subservient to his/her goals. Truthfully, I'm an Ancient Huge Chaotic Evil Red Dragon and a bunch of guys in armor etc come wandering into my lair, what do you think I'm going to do? Sure, I might toy with them, I'm cocky and its fun to watch the doomed little manlings twist and squirm. Of course if they attack me, insult me, look cross eyed at me, or when I almost inevitably get bored, then they are quite literally toast (I'm not Chaotic Evil for nothing after all).
OF COURSE it is possible that said dragon has some agenda that might potentially motivate it NOT to eat the PCs, but again you're modeling the threat level to the capabilities of the characters. Clearly if the dragon lair is a mile from town and easily found then when the low level party almost inevitably enters within you're going to choose to construct the dragon's agenda in such a way that something more interesting than, "Its the dragon's turn in the initiative, breath weapon, you're all dead" happens.
My point is that there is no such thing as this mythical pure agendaless sandbox. It is not just a legend, it is a myth, like unicorns are myths, because unicorns and agendaless sandboxes both cannot exist practically in the real world.
Combat is only likely occur if both parties think they can win and want to defeat the other guy for some reason. And once it starts, if one side is losing badly, they'll very likely be in run/negotiate mode.
That depends on your definition of 'combat'. When the level 1 party encounters the ancient huge red dragon, that may well not resemble combat so much as a Saturday afternoon BBQ, but surely there will at least be an initiative check, maybe even a bit of running around. Its not going to matter one lick if the party wants to negotiate, if that dragon was in the mood for roast dwarf all their pleas for mercy will do is amuse the great wyrm. Likewise good luck outrunning a dragon that can fly as fast as a running horse.
Now clearly, PCs will run from overwhelming danger, and they may often get away. They may negotiate or surrender too, and that might even work. However if you really objectively consider the habits and morals of most monsters its pretty unlikely there'd be any hope of escaping most such situations. Death may be delayed but evil humanoids are going to do something horrible to you, the undead will just eat you, most mindless monsters can't be reasoned with, etc. The results of most such encounters will be pretty grim, even if some remnant of the party does manage to escape.
Actually 4e characters are MUCH more likely to actually escape such situations, they have a bit of resiliency that is mostly lacking in previous edition characters, and running an escape sequence is pretty straightforward.
That aside though, I do find that many of my encounters, if I had created them under the CR/EL system, would fall outside the levels where there even is a suggested XP award. I don't find it uncommon at all to fight a battle where one side's basic combat numbers are higher than the others by double digits or similarly extreme disparities in special abilities exist. The game still plays fine. World doesn't stop turning.
Eh, the 2nd encounter I ever ran in 4e was a level 1 party vs a Carrion Crawler (level 7 controller IIRC). Well beyond what is recommended. They survived, killed the thing too. I've done many other such things. Works fine. You do have to either luck out or know your way around the encounter system of course. I probably lucked out in the above example, but it works. I think AD&D is a bit looser in some ways about what exactly you can pit against whom, but its not that much different. IIRC in 2e I once had a level 1 party fight a Hill Giant. It was a very low hit point Hill Giant, but it was still a nasty and for several characters fatal encounter. A 4e Hill Giant would be SLIGHTLY out of line, but mostly because monsters have fixed hit points. Downleveling it say 3 or 4 levels would work though.
To be fair, this is one reason why I like vp/wp. The one-hit kill factor is vastly decreased.
Again, not necessarily. While in many cases, you might be right that characters of disparate power are unlikely to fight to the death and a high PC mortality rate bogs the game down, I don't think the game is much fun unless, at least on occasion, the PCs are legitimately up against the odds. I find it quite thrilling as a DM to throw a battle at the party that I truly don't think they can win. For a variety of reasons, those usually turn out well.
To be fair, I occasionally do the reverse as well, though no one ever seems to talk about battles that are too easy.
Well, sure, the PCs should be 'up against the odds' often, but that is IMHO the thrust of 4e's encounter-based design, to maximize the likelihood that a given encounter will produce that result (if you want, you could of course go for a rout, which also works OK in 4e). Anyway, the point is you shouldn't have to use vastly different leveled things for that, in fact this was a big flaw in the CR/EL system, that small factors could mean a HUGE variance in ACTUAL challenge vs rated challenge. 4e succeeded in having its EL system be a pretty fair estimate. Even when you go against it at least it tells you what you're in for. IMHO DDN needs to do the same, and I'd like to see a good solid ENCOUNTER design system, probably based off that in 4e. It can be presented as one of several tools of course, but it would be a real shame to lose THAT feature of 4e.