The topic of level limits for demi-human characters seems to be making the rounds, and I see that I’ve not really ever weighed in on it except in my Roll To Advance system of alternative XP/advancement rules, so I’ll toss in my two cents here.
I’ve personally never been a big fan of racial level limits, and for a long period of time our method was to allow demi-human advancement past the listed maximum by doubling XP requirements from that point on.
Though I don’t like racial level limits, I do think that humans get shafted by the game as written and believe that there should be something to offset the pretty significant bonuses that demi-humans get. I might be biased, being a human who prefers to play human PCs, but I prefer a human-centric game. And as most of our games don’t reach the point where level limits become an issue, the balancing “cap” never really does a lot to balance our games.
If I were to monkey with the system these days, my approach would be to tweak the XP requirements for demi-humans, requiring elves to pay X% more per level, for instance, to offset their increased capabilities. I don’t know exactly what the numbers would be for each race, but it would be something noticeable but not overwhelming. Enough to make it a real difference from session one but not enough to force everyone to play a human.
Our current game is by-the-book AD&D so I’m fighting the urge to tinker with this, but if I was going to it would be via XP requirement adjustments in place of level caps or giving humans some sort of racial bonus.