Large amounts of horizontal character development is going to make people get even more attached to their items and whatevers; and it's going to make it even more difficult for the devs to increase the level cap eventually.

A better compromise is to increase the cap by smaller amounts, like 5 levels every year. That way new items and gear are upgrades from the previous tier, but the previous tier isn't completely obsolete and can be used as entry level or early-mid level gear for the new content.