Thanks for your reply. You mostly got where I was coming from. However I'll explain some more.
The XP in PM64 and TTYD was on a sliding scale. For example a Gooma gives you 10XP at level 1, 5 XP at level 2 and 0 XP at level 3. So you can't infinitely farm XP to max level early on. Sure enemies like the Amazee Dazee are the exceptions. But mostly, each area of the game caps you at how, many levels worth of XP you can farm.
So hypothetically if a boss was giving you troubles to beat (most likely an optional one as the story ones are pretty easy) at the highest level you can farm currently, you have to progress in the story so you get get more XP from tougher enemies. In reality this is no different to getting better loot and better badges further in the story to make Mario more powerful.
I actually agree with you on the skill tree. However make it such that you gain skill points at set points in the story. However you can respec your skill tree whenever you want so you can try different (ie more optimal) skill tree layouts. This doesn't change the fact that most enemy encounters don't have a reason for existing.
I agree that customizing your badge setups was the real "skill tree" of the first two games.
Thank you for the response! I see what you're saying in regards to diminishing XP. I think most RPGs do this, but paper mario likes to work with small numbers, so instead of requiring more XP to level up, they reduced the XP you get from enemies. That hits a snag when you get down to 0 XP, though. It would be nice if you could equip some sort of "challenge badge" that makes encounters harder, but gives you more XP. Perhaps something like the challenges form the glitz pits.
I think it's best to have some sort of XP from battles. Looking at this as a game developer, if I never gained XP from battles, I would only battle for fun or to advance the story. Once I got bored of battles, I would tend to avoid them as much as possible. This is a problem because battles are part of the core gameplay in paper mario.
Because I get XP from every battle in PM and TTYD, (before I hit the soft level cap,) I stick around for the XP, and then stay for the jokes and funny interactions. I'm given a guaranteed reward in terms of XP, and a potential extra reward from dialogue and set dressing. Without that guaranteed XP, I might miss out on a large part of the game.
In TTYD, you could find a badge that would let you kill 0 XP enemies by walking into them. In my opinion, you find it a bit too late, but it gets past the problem of boring battles with no reward. By the time enemies give you 0 XP, you've probably seen most of the clever jokes the developers put in anyways.
However you can respec your skill tree whenever you want so you can try different (ie more optimal) skill tree layouts.
I like the way you think! That would mean you could have a huge skill tree without feeling restricted to one branch. And I love more content in games!