The implementation of the item level system was certainly one of the more controversial changes for XI in recent years, and with good reason. It's a hack - that much is clearly apparent. While the decision to increase the level cap with the introduction of Seekers of Adoulin was not necessarily a bad one, the implementation of that level cap increase demonstrably is. To that end, I would like to see it replaced with a much more stable system that avoids the plethora of pitfalls that we have to deal with in the current state of XI.
The primary problem with the item level system is that it can never be flexible enough to work in a game like XI. We have too many stats, jobs and ways of playing for a restrictive set of item levels to cover all the bases. As it stands, item levels are (debatably) able to cope with the basics of levelling up - the damage taken and dished out. The item level system spectacularly fails when it comes to jobs that don't work on this paradigm, like support or pet jobs. The main issue is that, throughout the game's history, for gear, higher level has not always been better, and this remains the case.
Unless all item level equipment is automatically boosted to the maximum level as it is introduced, there will be a lot of jobs with a lot of equipment slots that work best with equipment that is not at the item level cap. For example, my best Fast Cast body piece options as WHM are the Anhur Robe and Marduk's Jubbah +1. If I want to cast quickly those are the best, but if I want to be properly protected I can't use them, because they doesn't have the item level nonsense to protect me. Nor do they give me level appropriate magic accuracy, or anything else of that nature. Job-specific or unusual/unique effects are even more difficult to replicate.
There's also the problem with non-offensive skills being shafted. How can I make Elemental Siphon scale to match my new item level MP pool? I can't - the "magic accuracy skill" hack doesn't help me with my summoning magic. How can my barspells keep up with the greater magic accuracy of monsters? They can't - Enhancing Magic is still capped at level 99 values.
The issue of taking damage is a really significant one. A "full level 119" set of gear is absolutely not the best for a lot of tasks, particularly for support and pet jobs, but if those jobs want to perform well they have to take the risk of being one-shot by the most mundane of attacks or crippled by enfeebles they should be resisting. That's not a problem with the job, or the player, or the battlefield - that's a problem with the item level system. You just have to look at the Eminent sets of level 117 gear - atrocious stuff for support jobs to use full time.
SE has tried to help fix issues by upgrading AF and Relic to give all jobs a job-appropriate set of item level gear. While that's admirable, it's also a bandage covering a decapitation. Full AF and relic were not good things to use back when they were the latest thing, and they still aren't for a lot of jobs. It's better, but it's covering up the problem. Even when SE "try" with stuff like Sifahir Slacks they get it wrong.
SE has said that they cannot increase our normal levels beyond 99 for technical reasons, which is fair enough. However, we already have a system for character progression beyond the level cap - merit points - and I believe that increasing the level cap through merits is a much more sensible and effective solution than item levels. To that end, I propose the following addition to merit points:
1. Addition of a new merit point section "Level Up" for each individual job, with a single "Level Up" category in which merits may be spent.
2. A system by which the cap for this "Level Up" category can be increased by participating in what was formerly "item level content", including Records of Eminence and reives for newer players.
3. The removal of the item level system.
The difference between a job-specific merit based approach and an equipment-based approach is that jobs can be specifically catered for. There would be no need to worry about using formerly "low item level" gear, or effective pre-Adoulin gear, because the level you earned would be guaranteed regardless of equipment. Non-offensive magical skills can scale properly, and jobs with niche stats like support jobs can keep using the rare (or even singular) gear that enhances their capabilities. Tying the system to item level content isn't really necessary, but it would require the smallest paradigm shift from SE's current setup.
I do understand and appreciate that people have grown to tolerate the item level system over time, and that a change of this nature would be an upheaval to those people. The transition would have to be made as easy as possible, probably with an allowance for people already with former item level equipment to automatically unlock these merit categories. However, a well-managed transition to merit-based levels would be a much firmer foundation for the game to move forward from, and would not marginalise jobs that already have restricted equipment options.
Thanks for reading!