I've put a few hours into one of my first characters and if I pause the game and go and level up, I can shoot from Level 1 to Level 7 in just a few moments and I was wondering if I stay at Level 1 and just choose to ignore the levels what impact will that have on the NPCs around me?

Particularly wild animals, random aggressive NPCs and even shopkeepers? I'm guessing the shopkeepers will still have an inventory that relates to a Lvl 1 character? How about randomly generated NPCs, will they also level up with me accordingly (or not level up, in this case)?

I know when it comes to certain weapons and armor, it'll start to spawn in the world around me and in the shopkeepers inventories or random chests as I level up. Would the act of me not accepting those levels stall that?

Yes. Skyrim will remain a level 1 game as long as your character is level 1.

I actually intentionally do this around lv 9. it keeps Dawnguard from triggering (at lv 10) and allows me to RP my way through the world at my pace and difficulty. I can use console commands to add perks I would have chosen were I actually leveling up so its not as though I handicap myself to much.

Awesome, thanks for clarifying guys

Hmmm... might try something like this...

Aren't there certain things that are static level? Dragon priests come to mind.

Hired thugs are also static. Eventually I'm going to have to do it, but can maybe hold off on it for quite awhile.

Some daedric quests and a few of the jarls' favor quests have high minimum levels, so you would never be able to do them (without the mod that lets you change that). But some of the more useful daedric quests can be done at level 1. Forsworn and Falmer also have high minumum levels (I know Falmer minimum is 9), so those areas can be very difficult for a level 1 character. However, your skills will still be increasing, including things like smithing (to improve your iron or leather armor), so eventually you will outclass even those enemies and might be able to take on things like dragon priests without dying too much. Just be careful when opening the inventory screen not to go to "level up" accidentally -- there's no way to back out of it except to bail out of the game (eject the disc or alt-tab and force the game to close, something like that).

Thanks! That's the stuff I was looking for. I play through the Xbox 360 so no console commands or mods. I've been keeping several saves staggered and every new corner I save, out of habit. I wasn't sure if what I was trying to do would work the way I wanted it to work in my head and for the most part, it does.