Lots of interesting food for thought. I must admit that I'd feel more comfortable dramatically raising the levels needed to acquire the feats to craft magic items-given that you need to be 18th level to craft a permanent magic item, and 12th level or thereabouts to craft a magic wand, that dramatically reduces the number of magic items available in the campaign-and this applies just as much to villains as it does to heroes, which means that as DM I'd have to think up ways around these limits, which is only fair, after all!
And, as I mentioned, I'd in all likelihood dramatically trim the number of hit dice for certain monsters-giants being the most obvious, but but prominent NPCs would also see their arsenals and power levels reduced appropriately. I've often found that I'd feel comfortable cutting levels by as much as one-half to two thirds, especially when I cannot think of any real rationale or background for these powerful characters.
Funny thing, actually; my ideal game would be a hybrid of all three editions, with the 1E system of combat (one-minute round and segments that allow for more DM adjudication), character abilities and monster stats, fused with the 2E rules for specialist wizards, and the 3E skills and some of the feats, without prestige classes. Granted, it might be a hopeless mishmash, but at least I tried, right? (BTW, I even came up with ideas on how to fuse the THACO system with multiclassing and giving monsters classes, although one could as easily say that a monster simply has a higher THACO, the way the original G3 module had Snurre fighting like a cloud or storm giant, depending on whether he had his sword or not.)
I'm glad to see the positive responses to my concerns. I must admit that I'm speaking more from the POV of a storyteller or novel writer as opposed to a DM, since I have no one to game with. Indeed, one of my own personal pipe dreams/hopeless delusions is to write role-playing novels that have deep characterizations on the level of Tolstoy's War and Peace or Dickens' A Tale of Two Cities, Dumas's The Count of Monte Cristo, or what have you. It's still swords and sorcery with D&D motifs, only the characterization and history are on the level of Shakespeare or Homer. Rangers struggling with alcoholism, gnomes who have war flashbacks, halflings who sow political mayhem and exploit the weaknesses of men with their hats of disguise, that sort of thing.
And yes, I know I'm nuts.