I'm shocked nobody has mentioned the fact that it does seem some what "cheap" that players can basiclly power level themselves with the current retreat system that mobs have. I've seen far too many players (mages mostly, since they can get away with it) that just group up a bunch of monsters, cast their first AoE spell, run away until that group retreats (and they'll still all be clumped together), AoE again, run away, and rinse and repeat the process with little to no HP loss. There needs to be some kind of penalty. A group of mobs should be laying the smack down on you.

Increase the distance at which mobs will continue to chase you, unless you're on a leve quest (since they are timed, you don't want to run down the clock, mind you they only take about 10-15 mins to complete anyways with a bunch of spare time left over) or anything else where time is of the essence.