Level Scaling

I got into a conversation regarding "level scaling" in computer games.  Poster child games that suffer from level scaling problems are The Elder Scrolls IV: Oblivion, and recent Bioware games.  What's so bad about level scaling?  It destroys progression.

Does it matter if I do 10 damage against a 100 HP enemy or 100 damage against a 1000 HP enemy?  No not really, the ratio is the same, and if my opponents simply scale up when my character increases in power, then what's the point of increasing in power?  The game's mechanical progression become moot and turns into effectively wasted effort on the programming side.

It's a different thing if the game's progression is designed such that you should reach a certain power level by the time you face more difficult challenges.  That is game progression.  But to artificially adjust challenges directly based off of player power level defeats the purpose of game progression.

On the illusion level, I suppose it does have the merit of allowing players to see larger numbers show up for damage (even if the effort remains the same).  Similar to the differentiation between a true random number generator and a pseudo random number generator.  However, the strength of the illusion with a RNG serves a purpose in providing a level of unpredictability, whereas level scaling merely makes the game static.

In short, don't level scale.  It's the lazy (boring) way to design "challenging" encounters.