Personally I think instead of leveling the world around you the player it would be more realistic/emmersive if the world was already set without boundries to the player. I do not think that it is a negative thing to have enemies in the game space which will kick the crap out of you at a lower level, you learn as you play which enemies you want to tackle and which to high tale it and run. How cool would it be to at level 1 see NPC's striding around in Daedric armor or Glass as well as NPC in lower level armor and garb as well?
If the game is set up so that an enemies equipment and abilities were set to be also representative of the enemies level it would make for a much more interesting game. In this manner the designer would not need to worry about holding the gamers hand and preventing the player from entering zones too difficult for the players and allowing us to either take on the challange of a enemy whom out matches you vs. avoiding the harder enemies for ones more in your own range and giving us instead a visual que as to how we want to proceed. Give the gamer the choice I say instead of limiting freedom and challange based on level, make the game truley an open world game.
This idea came to me years ago during a first play through of Oblivion where i accidentally stumbled upon Umbra, I spent many hours trying to figure out how to defeat her for the armor she wore when i was like level 5, and thought man this would be awesome if there were more encounters like this