The problem has never been levels. There are just as many characters under level 10 hanging around in the outskirts at night as there are high level ones, and they do it whether the high levels are there or not.
The difference with the higher level characters, is that they fear different things, mostly based around whatever weaknesses they stiill have.
Since Dribo is already perma'd, it doesn't matter if people know her fears now, so I'll use her as an example. At level 2, she was afraid of everything but cats and undead. After Corvus had a zombie cat maul her in the outskirts, she then became afraid of normal cats as well.
By level 15, she had worked through most of her fears. All that was left, was the fear of normal cats, of losing Rell, and of people not liking her. The last two led directly to her being captured and executed
The fear of ~monsters~ is just one kind of fear, and really, the cheapest sort, since it's simply a survival instinct. Lowering the level cap only affects that one kind of fear, and ignores that the things that fit under "gothic horror" are most often the internally generated horrors, the unknown, and the things that you have no control over.