Because rewarding PCs for killing things or subduing them encourages PCs to go round looking to kill things or subdue them.
The answer is simple, at least in the original troupe play 1e paradigm. It would then be easy for a player to simply 'pay up' a new character. That would work both for a single player (though Gary forbade all such cooperation, so there is that) but also between players. When Joe gets a new Dwarf because his old PC died, Fred gifts the new character with 10,000 GP and he just trains himself up to level 3 without ever setting foot in the dungeon. There's NO RISK. The game was meant to be a test of player skill. Such shenanigans undermine the whole basic concept of play. So XP, in 1e's paradigm, is vital.
Right, instead leveling becomes more a signifier of the PCs progress in their narrative. First they start out as some locals handling some minor local threat, then they gradually progress to bigger and bigger stuff, based on a sort of natural story line. Instead of everything being motivated by 'moar loot' it is motivated by the actual character traits of the PCs. They defend their village because it is their home. They overthrow the evil warlord because he is unjust and threatens their home. They march out to the Ogre Hills and put paid to some ogres because they killed their friends. Etc. You can get more creative than that too.
Other actual player shenanigans to abuse the system: Enter a jewelry, kill the owner and grab all the loot, then ask the DM to give them XPs for the gold value. That is why every NPC in town was a retired level 15 character.
Thief's Guild didn't get its cut, jeweler paid for protection, City Watch is after you now, etc. Your days of being able to rest, recuperate, train, heal, etc. in town is now shot. Roll up a new PC, lol. Only a very unimaginative DM needs 15th level jewelers. If the character can somehow plan it so he avoids all these problems, then good for him, but you can count on that will be harder than looting a dungeon level!
I do think this is a rather elegant approach.
I can't find where this was (I keep thinking it was in Mongoose's Conan d20 game, but I'm not able to confirm that), but I distinctly recall seeing an RPG where you received XP for GP, but only for GP that you spent. Furthermore, it had to be spent on inconsequential things, rather than stuff that had game mechanics.
That to me is the single most useful table in the whole damn book! Why? Because it's a) absolutely essential and b) nigh-impossible to reverse-engineer from the xp values given for monsters in Appendix (E?).
Henches get half, yes. We also give half to anyone who dies (relevant if they are later revived).
While I love training and will keep it forever, this hard-stop always bugged me. Long since modified.
Indeed - that to me is perhaps the biggest side-benefit of training: it both causes and enforces downtime.
The RP-policing piece isn't something I've ever had affect xp, only alignment. I dropped xp-for-treasure the moment I started DMing, partly replaced with a "dungeon bonus" after each adventure; but the end result is much the same - complete the mission, get a bonus.
Yes, this is a pleasant side effect of having training in the game.
That said, my training costs aren't quite as extreme as the originals you're referencing.
I always look at it the other way round: you're not writing a test on what you've already learned in the field, instead when training you're learning a new round of theory which you'll then take into the field and put into practice.
