Now, I did search before posting this, things like 'hidden levels, hiding levels, invisible levels ect.' before posting this just to be sure.. but
I think it would be a good idea to implement the system that other servers are using in order to hide character levels. How it stands now, you can see just how powerful that MPC that attacked you was, and you can know what other characters can, and cannot do. As it stands now, all it takes is a quick look to identify Witch, witch, witch, MPC is level 12, witch, evil palemaster witch and so on.
Even though people will obviously try not to meta- knowing characters levels, I think a lot of it can happen subconsciously. Even those little OOC thoughs we try to keep out of out characters, like "Alright, I barely beat that MPC last time, but it's grew 3 levels since then, I don't think I can take it alone this time" would in turn be something more along the lines of "Alright, I beat this before, It's been a while though, let's just hope I can pull it off again"
I think it would add a lot to the atmosphere, simply not knowing if someone is a wizard, or if they can run faster by being a barbarian or a Monk, making players guess if they -really- think they know their enemy enough to best them.