...and this is how they broke it in DDO. Just like you ignored the rules written, so have the devs and created a bad situation which is just getting worse.
Yes, it works in your confined world with just your players, but it is very bad in a generic world with different play styles.The more they deviate from the core roles for one play style, the more they penalize others. And yes, it is a penalty because as the monsters get adjusted for the hard core players, the casual take the loss.
The rules are not horribly broken as that is your minority opinion (I have never, ever heard that arguement as feedback for broken rules at any convention). But, that is the nice thing about a game where you can make your own house rules.... In your case, I honestly don't see how it lowers the fun level to have an XP penalty (they just get to play MORE to level up ).
for the OP:
Doesn't sound like they will fix it properly by using the XP penalty. Not really a punishment for the power levellers.