Level: 600 [Wizard] Age: 5y, 15d, 14h, 30min and 44s

The game is what you make it to be. I will address your points below.
While I do think that active players should be rewarded and encouraged, I'm
not very fond of the idea of hurting players who do not play the game 24/7,
atleast not anymore than how they are already affected (e.g. the pcitytax).
It wouldn't be very encouraging to come back to bat after being away for a
few months (due to rl reasons or whatever) only to find that many years of
work to obtain a good eq set have disappeared only to give a set of bored
highbies a chance to do the same eqs once more.

What is possible tho, is to uptune the eq damage for items that are not
wield/worn by their creators, but the tune would atm mainly hurt tanks.
This is a possibility, and has been discussed. I doubt it will be implemented
for all eq, but some powerful items may see features like this in the future.
As your example stated, there's a need to avoid "let's invite a random newbie
to the party to lower the usable level" kind of issues.
This is both a technical issue and a balance issue. Currently there are lots
of checks in the code to see if a creature is above level 100, and if it is,
then it's assumed that the creature is a wizard. These would have to be
changed (wouldn't be too hard).

The balance issue is another problem tho. Currently the max level of 100
limits to some degree how powerful a character can become (given that level
is not the best possible way to limit power), which also means that a person
who starts playing today has atleast some chance of catching up with bat's
highbies if he works hard to reach that level. If the level limit is removed
completly, there's not going to be much chance for new players to become as
highbie as old-timers that just keep on playing and playing and making more
levels all the time.
This goes against the nature of most guilds. As cool as it would be to
create an all-powerful character that is capable of doing everything, it's
not very logical to allow LoC's, the unholy servants of chaos, join nuns
or templars and fight against the forces of darkness. Same thing with
barbarians and mages for example. The fact that certain character abilities
(blasting, healing, tanking) is tied to backgrounds encourages partying
and forming social bonds between players. A game where you can do everything
on your own tends to get very boring too.