Ok, I don't understand the point of leveling. Basically, leveling seems to get you more powerful items at the same time as more powerful enemies. So unless the items scale up faster than the enemies, which I haven't noticed, it seems like the smartest thing is to simply stay level 1 forever. The only downside I see is that you don't get to improve your stats, but so far I'm not sure that's a huge penalty.
Am I missing something on the way leveling works, or is that an accurate summation?