dtgreene: Would you rather have level caps? Would you rather have your Drow character (or even your regular Elf character) be unable to advance past a certain point, while your girlfriend's human can advance? How would you like being only able to advance to level 5 when fighting enemies meant for level 21+ characters?
This is how earlier editions of AD&D worked. In terms of cRPGs, it's especially bad in Pools of Darkness, where Humans are the only viable race. Be glad you at least are only one level behind (and it will remain only one level behind, even when you reach levels in the 30s).
Darvin: "It was worse in AD&D" isn't really a good excuse. It's more like setting the bar really, really low. It is a problem, and one that was exacerbated in NWN2 when they kept throwing more and more ECL races into the mix with each successive expansion pack. I get why they wanted to do Genasi, but honestly the races are poorly written rules-wise.
It's one of the fundamental issues with 3rd edition that goes back to the core rulebook. There was a cognitive dissonance between the design of different aspects of the game. With some things, like the spell list, the designers were all out and willingly created monstrously overpowered content. With other things, like the races, they were very subdued and cautious with what they published. They set the tone for all future publications, and the end result was that with races if it does more than eat, sleep, and poop it probably needs an ECL. Future editions of D&D would solve this problem by ensuring their baseline races were powerful enough that they had enough room to create the fantastic races they wanted later without creating balance issues or mandating a stupid system like ECL.
Personally, I have a different idea for how races could have been handled without ECL while maintaining balance.
Basically, any non-trivial race gets a special class, and all the fancy abilities of the race are instead assigned to the racial class. This class would be balanced against the other classes in the game. Then, a character of the race must take a certain number of levels in the racial class first. After those levels are gained, the character can then multi-class into a standard class, getting the class abilities along with the racial abilities. Also, racial classes would not be counted when it comes to the multiclassing XP penalty (which isn't really the best mechanic anyway).
One could further add the race-as-class idea, where each non-human race gets a class like those from early (pre-Advanced) D&D, while not requiring them.
Now the only thing that needs to be done is fix spellcasting so that caster level isn't as important; a Fighter 19/Mage 1 should be able to at least hit with a Magic Missile, for example. (The main issue I see here is the way Spell Resistance works, and the fact that saving throw DC is determined by spell level, making low level spells too weak later on.) Of course, balancing out the spell lists would also help.
