That's the way most MMOs do it, because it's a lot less work, which means they can focus on adding more content instead of constantly rebalancing everything.

People want to keep progressing. If they went with level as the method of progression, they'd have to raise the level cap with pretty much every patch, or people wouldn't feel like they'd gone any further from (for example) 2.0 to 2.5. And if they're raising the cap, they're also going to have to add new abilities, which means tons of work balancing those abilities. Most people would not enjoy the feeling of leveling from 50 to 90 without gaining any new abilities. And when does it end? Two years from now, we'd be level 400, and they'd either have to give us something like 80 abilities per job (so many buttons!) or they'd have to constantly rework when each ability is acquired (so now you're only getting one every 10-20 levels instead of every 5 or so).

But increasing your iLevel from 50 to 90 still feels like progression (you're hitting harder, living longer, etc.), without requiring all that design and balance work. Abilities that are balanced across the board at i50 are generally balanced across the board at i90. So when it's patch time, they can just add new equipment to meet the new challenges, and spend more resources focusing on those new challenges.

Anyway.

Yeah, AF1 is enough for the main scenario stuff. You might also consider picking up some level 49 jewelry & belt from the market boards, since you likely won't have very good items in those slots. Even the HQ ones aren't generally very expensive, and by the time you've got replacements for them, they'll probably be 100% spiritbound so you can convert them and sell the resulting materia.