I do of course see the need for level scaling. I guess its most essential function is that it is easier to work with for the developers. And the less time focused on the monsters the more time can be focused on more important stuff, like quests or lore. But the monster killing part is probably the most important factor of feeling powerful in the game. And that is not something you should compromise with. The most helpful thing about level scaling for the developers is probably that its so much easier to balance the game and gradually make it more challenging, especially compared to the manual way of doing it (=no level scaling).
As I mentioned above there are more important stuff in a game than the feeling of power. I'd say the most important aspect of any game (whatsoever) is that it feels real. This is essentially what makes the Elder Scrolls games good to begin with (because to be honest, Elder Scrolls neither have very good graphics, story or combat). Elder Scrolls is extremely lore rich and it manages to create a believable and wonderful world. So back to topic. What ultimately annoyed me the most about the daedric wearing bandits in late game, the very mediocre treasures in early game and the fact that an ogre was stronger than mankar camoran, it was because it was not realistic.
I think there are ways you can keep the realism in a game without level scaling and still keep it fairly balanced. One thing i would like to see in TES V is groups of enemies, this would both be: realistic, it would be challenging and it would create a difference in power (if I barly could kill one bandit 5 levels ago and I now can barly kill 3 bandits, it results in a difference of three in power).