Seriously...
I wrote about why games have steep leveling curves in my blog a few days ago. It has nothing to do with the economy or anything ridiculous like that. Its almost entirely for the hedonic treadmill, i.e. giving players a carrot to chase after while developers work on new content.
It has NO effect on anything other than the amount of time players invest into a game. When its taken you a year to get to level cap, you're more likely to stick to the game even when you're fundamentally unhappy with it because you've already invested so much time and effort into it. Leveling curves make this happen by dangling a goal infront of you, then slowly increasing the difficulty of the road you're walking down until you finally get it.
Its the same basic treadmill all video games are built around. Each level in Super Mario Brothers is designed to be more difficult or at least more complex than the previous because once you achieve a certain level of success, achieving things of similar levels become progressively less thrilling due to hedonic adaption.
Leveling is the first stage of the MMO treadmill, High level gear and end game content is the next. Its a basic formula to keep people interested.
[Challenge] => [Reward] => [Challenge]+1 => [Reward] => [Challenge]+2 = [Reward]
In the case of leveling it goes like this:
[Grind EXP] => [New Ability] => [Grind More EXP] => [New Ability/Gear] => [Grind Even More EXP] => [Level Cap] => [End Game Treadmill]
The only problem created by power leveling is the issue of players circumventing the hook and snagging the bait. People who rush to level cap don't get reeled in by the treadmill, and it makes them less likely to stick to the game if no new content is produced aimed at them. That's why developers dislike Power Leveling, because it allows people to get to the end of the game more quickly than they intended and the treadmill effect doesn't kick in.
On the player side, the only effect power leveling has is a result of either PL'd players complaining about lack of content -- which they have no right to do, since they sped through all of the content that's supposed to keep them occupied; or nonPL players complaining because they feel Power leveled players are /cheating/ which they are not.
The real problem is that developers use leveling as a crutch when they should focus on challenging, substantial content as a means to keep players in their games. Granted, I understand that's a terrifyingly difficult thing to achieve, but frankly, its what we should be demanding for our time and money.
This also goes on to explain why FFXI's community started to taper off, just like WoW's is. The treadmill stopped working. The goals presented in FFXI and in WoW these days are significantly LESS difficult and compelling than the ones previously introduced, and there's nothing they can do to fix that because the games are so old and each iteration of new content supersedes the previous in largely uninteresting ways.
FFXI and WoW are dying because all games die. You can cite other games that have lived for ridiculous amounts of time, but honestly, most of them have lasted because of modding and open-ended content, or because they are maintained by a cult following the likes of which neither WoW nor FFXI will have. Frankly, on the subject of WoW, Blizzard only managed to maintain it because of the social magnetism it managed to garnish -- a massive number of those millions of subscribers were casuals who used the game as a social outlet.
Fun fact, the end game community of a game is seldom larger than 10% of the games population.
Clarification: The treadmill effect and the attachment are separate things, the attachment just happens to feed off of the treadmill. The hedonic treadmill is a reoccurring lust for new challenge due to the human brain's tendency to adapt (hedonic adaption) to the extremes of joy (Experienced from success) or conversely sadness (experience from loss) and our desire to hunt down higher levels of success to recreate the previously experienced high -- the resulting attachment to something is from retrospective analysis of time spent. (not sure if there's really a name for it, but this occurs with a lot of things, including physical fitness, as people feel attached to their developed bodies and thus seek to maintain and improve their physical condition almost obsessively) They aren't the same, but in my post I related them to each other in my reference to "the treadmill effect" because they occur symbiotically.