I usually leave it at 0, unless the game is really poorly balanced, like Morrowind. In Morrowind I scaled the difficulty slider with each level up after 5 (or sth) in order to keep the game challenging. At level 15-20 (it depends on character) I ended up with +100. This means that the game will be gradually easier with each level-up after 15-20 - well, Morrowind was never balanced with greater levels in mind, unfortunately.
Powergaming is a conscious choice. If you choose to wait to level for your multiplier, or spam enchantments on armor, weapons, rings, of course the game will be easy. But when you create a mechanic to balance the effects of that style of play, you remove the choice of playing a more muted, realistic character, instead of some fantasy cliche.
Instead, create "high level" areas where even strong characters would struggle...a valley infested with enemies, super monsters. There should be other ways of overcoming these obstacles (such as recruiting a militia of followers) but for those who want to feel like a god, they can powergame to their hearts content and wade hip deep into a situation that would kill a normal lone character, but will present a satisfying challenge to someone who's taken every advantage.
I disagree. Powergaming should be fought with. If you can become godlike at level 10, then sth is CLEARLY wrong with game balance. If you can gain 100% Chameleon easily and enemies can't react to it properly, then it means that part of game mechanics affecting this is broken.
Bethesda should really re-think some elements of their levelling system - generally, it's really good, but going after maximum multiplayers is too gamey and unbalanced with the current settings. There are numerous mods that fix this, so it's definitely possible to make it more realistic and make powergaming less viable.
Throwing thousands of monsters at the player is just silly - it's not hack&slash game, let's be reasonable. No one should ever be able to fight with so many creatures at once and win.
Balance is the key.