TURSHiA: You are comparing two very different games with different game mechanics. Pillars of Eternity is a party-based RPG, which relies on possitioning, tactics and class-speciffic roles, while The Witcher is a single PC (playable character, not personal computer) game. In my oppinion the most comparable game is Gothic (and its sequel).
It doesn't really matter tho, both Pillars and Witcher ask you to master certain kind of combat system, and I believe that it's quite simply wrong that an opponent four levels higher than you should be able to one-shot you. Then again, I'm coming from a position of a guy who'd welcome for the progression system to be removed from the game altogether - in other words, either do it properly or don't do it at all.
Remove levels, Geralt can't really level-up from where he is at that point anyway. Remove equipment, just leave some scavenger hunts and allow player find stuff with massively different properties that way, including swords which behave somewhat differently. Personally, due to the way progression is designed, it doesn't really give me a particularily good feeling anyway - so just get rid of it and use resources that you used on it to polish up the combat system and give us proper difficutly curve.
Or okay, do Gothic, whatever. See, thing is, you can't quite have it both ways for your systems to work properly. Gothic did not have fully open world - it had a world which slowly opened up as you were getting stronger and more experienced with the game. At any given point, developers knew roughly about what kind of level/player skill will reach which part of the game, and so they could have designed it around that. Since Witcher 3 offers completely open world, partial level scaling is the way to go at the very least.
Glocon: Haha, you killed me! ;)
Sad thing is that I'm not really making that shit up. Now imagine that there are guys who weild blackjacks 1000x more powerful than other blackjacks. It's incredibly inconsistent.