okay, 38 pages is a little much for me to read through, so what i say has been said before, just kindly ignore me.
the lastest online RPG that i've played before CoH was Final Fantasy XI (FFXI from here on out). the exp system in FFXI is very similiar to that which States is suggesting. if you are dead, you'll get no exp no matter what, and your death timer is set to one hour before you are automatically sent back to your Home Point (hospital). so, just be greatful of what you guys already are getting and see the inherent break in the system with the dead still getting exp.
also in FFXI, there are level ranges and modifiers as well as distance limits. for example:
say your buddy is lvl40 and you are lvl3. screw side kicking and just have the lvl40 solo some mobs. in the current system, the lvl3 would get the same base exp from the kill with a party modifier, say for sake of arguement, they both get 100 exp for a white mob. however, in FFXI, the lvl3 would get something like 1 exp for this kill. how? the base the exp off of the highest lvl and then had modifiers to that.
using the above example, assuming that the white mob is worth 50 exp to the highest lvl in the party of two, if he had solo'ed it, here's how the break down of exp to each person would be:
(50)(.6)=30xp
now this 30 exp would be modified further by lvl checks, so the lvl40 would get 30 exp since he is the highest lvl in the party, but the lvl3 would get:
(30)(3/40)=2 exp
in theory, you could pwrlvl this way, but it'd take forever. a good compromise would be to add the lvl modifiers to be a little more "harsh" for wide lvl variants. this won't affect SK and EXE at all, and you could get rid of the distance modifier to keep everyone more or less happy.
by no means is FFXI a perfect game, nor is CoH. the way that exp is handed out in FFXI is a little bit more fair though. granted, it means that inorder to be pwrlvled, you'll need an outside healer to keep the team cured as they kill much higher than the average party, but realistically, it'd take so much longer to kill.