I believe one way of reducing the powergaming-issue is to give the players other meaningful ways to play the game, ways that don't necessarily include constantly improving your character's skills and stats.
Examples include but is in no way limited to ingame mini-games(gambling, boardgames, cards, etc), tournaments/duelling arenas, politics (Give players the necessary tools to run their own towns, as well as allowing them to form alliances with other towns, declaring war, etc. Player justice is also a "holy grail" here).
Character individualism is also important I think; To give players the ability to stand out in crowds even if their character isn't level 280 and doesn't have all the most l33t equipment. Both base level character customization and "secondary" customization (clothing, equipment, house decorations/customization) are important there, and UO does the second very well compared to most other MMORPGs. It's quite lacking in the former though, as the only character customization that is possible is skincolor, and hair/beard-style & color.
A decent permanent death system could ensure that your characterbase (and most likely, playerbase as well heh) is continually "renewed", as there's no certainty that a player will ever reach the top even given enough time/patience, nor any guarantees for how long they might stay there if they ever reached it. I'm not sure if it would do anything about the "powergaming" issue though - perhaps it would even worsen it.
You have games like World of Warcraft where there's absolutely nothing else to do but to continue leveling, gaining more xp, praying that you're doing it quickly enough to keep up with your friends. If you're not, you won't be able to play with them since they'll go into more dangerous zones, and you'll only ever see them if they decide to have mercy on you and fall back to help you do a few quests now and then. I'm experiencing this myself almost every day, so I know what I'm talking about there heh
This is what I feel is most negative about WoW (and other games with levels), that they force people to "keep up" or else they are split up from their friends/other people.
And then you the opposite in games like Second Life, where there's no focus whatsoever on the above - there are no levels to gain, no skills to raise(I think), instead it's all about players creating content for themselves & others.
I think there is a "golden middle way", which has room for both character improvement and content creation/roleplaying/socialising without necessarily having to hop onto a treadmill everytime you login.
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One more potential solution could be either make the “rabbit” hop slower (less difference between low and highly-skilled players) or make the chaser run faster (fast advancement), but these methods suffer from both caveats above – disillusionment as well as insignificant identification (a symptom of disillusionment, really) between the player and their character. Oddly enough, this is often the approach used on many player-ran shards I have seen.
I'm not so sure that 'making the "rabbit" hop slower' is such a bad idea. Less difference between low/high-skilled players would mean a larger playerbase to play with for each individual player, and it wouldn't force people to powergame just to keep up with their friends. Couple this with what I mentioned above about giving players other things to do than just levelling, and give players other means of achieving individualism than just being higher level than others and having better equipment than others - and you may have a winner
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Role-playing could be enforced, which by definition generally eliminates power gaming, but this has the large caveat of alienating new players and enforcing an artificial restriction on the minds of those who play which only caters to the escapement player. The elimination of such a diverse player base is often desired for a fuller emersion, but can suffer the shard a great deal more as well.
True. Most roleplaying shards cannot even begin to compare against the pvp shards when it comes to playerbase and number of players online at the same time. Enforcing roleplaying deals a heavy blow to powergaming, but it's not really a solution to powergaming, it just attempts to force the players to play in a different style.