I get where you're coming from.
Though I do like it when the enemies you face get harder and harder as you level up (making it impossible to enter certain places or do specific quests until you are strong enough), I dislike it when the whole world levels up with you, like Oblivion, as you mentioned. Getting killed by a rat because you weren't paying attention or because you just ran away from a particularly nasty monster and had no health isn't exactly fun.
I tend to like games that find a balance between the two. They may make experience harder to come by if you are OP late in the game, or make health packs/potion rarer, or something of that sort.
For me it is the challenge that makes it memorable, as much as it is the story elements that go with it. When I remember games I think of tense situations where death was a mistake and a half second away. But obviously, as this thread shows, everyone enjoys RPGs for different reasons.
I think the happy medium is just having high-level and low-level areas. Keep them all accessible for as long as possible. You're rewarded for tackling the harder areas, but you're naturally guided towards areas of gradually increasing difficulty. That's pretty much what Morrowind does, actually, but lots of people think the game gives you no direction. Maybe more blatant direction would make for a better game.
You'd still get the challenge, you'd still get the reward, and how you dealt with them would be totally up to you. This gives you the element of choice within the constraints of the world.
Now, that actually sounds like it's more in the spirit of WRPGs than JRPGs, but I don't mind that. In any case, JRPGs do this on a "sidequest" level, keeping gradually increasing difficulty in the main quest. Skies of Arcadia Legends (I've never played the Dreamcast original, so I don't know what was added in Legends) also did something interesting--there was one specific quest where you would face increasingly difficult enemies that were scaled to your level, but level scaling was not implemented in the main quest. Some of my favorite and most memorable battles in the game were in that scaled quest, and it worked well in isolation.
There's room for challenge and choice, and the RPG genre is so broad I can guarantee you that some of the best solutions have been tried already. But like you, I prefer the happy medium.
GaroXicon said:
I've said my bit. I'd recommend the Extra Credits series on this very topic (Western RPGs vs. JRPGs, it's three parts), as they have similar views and a lot more interesting things to say than I do.
I should probably re-watch that, because my opinion has diverged considerably. I agree with them that they cater to different desires--but I do not think they are different genres. Having played early JRPGs that were heavily influenced by Western RPG traditions, I think there are too many similarities--especially now, with the streamlining of WRPGs for the past 10 years--for that claim to be valid.
Is Etrian Odyssey a WRPG? Is Phantasy Star (the original), with its superficial similarities to early CRPGs, one as well, even as it helped define so many of the traits we associate with JRPGs? I'd argue that neither one is, and I'd also argue that yeah, Pokemon is a JRPG. This just means that JRPGs are far to wide to be held to the strict definitions we try to impose on them. Come to think of it, the same is true of WRPGs. I think there are generalizations you can make about character customization (it's much more of a driving force, at least superficially, in WRPGs), story, and aesthetic, and they're enough to differentiate the two, but they're not enough to completely dissociate them.