I genuinely think going back would be much better. I'm not sure what possible negative consequences reverting back could have. Having levels locked into your character, either traditionally or through merits, avoids lots of the issues that the item levels bring. Yeah, item levels work for the basics - I've never claimed that they don't - but that's really not good enough.
Yes, barspells were capped at 99, and while it wasn't very "future-proof" to hard cap them it didn't really matter unless the monsters we faced got massively stronger. Now we've item levelled up with the appropriate magic evasion/defence on our gear to represent those levels, but from 1-99 the barspells would grow in potency as we levelled as well as our innate resistance. Unless the magic evasion/defence on gear includes that which we would have gained from levelled barspell bonuses, which I highly doubt, then barspell protection is remaining static at level 99 potency. And if they've put some kind of hack in with item levels that compensates for this... well, it's just another hack that tries to stabilise the system. I'm not a fan of bandages on top of amputations.
I do understand what you are saying. It would be significant in terms of work and hastle to implement a replacement for item levels. Patching up the holes that item levels bring, however, I think is worth it, and we've then got a much better foundation in-game with which to move forward.