Players are not told to make as much money as you want, however you want.
I've never been told that, by anyone, but I certainly would never even imagine why such an instruction would ever be necessary. I play whenever I want. I play in the style I choose. If I want to accumulate gold, I do. If I don't feel like accumulating gold, I don't. Pretty simple.
1) Gold is plentiful.
2) But the server has restrictions to prevent players from making as much of it as they want.
I agree with #1. I disagree with #2. I have never run into any restriction on accumulating gold. There are some merchants that won't pay out more than a set amount for items, but that is not true for all merchants. The xp gain restrictions have nothing to do with accumulating gold (in fact, you could be a low level or mid level character and still be quite rich).
In my opinion that would be much better than a straight-line increase in costs. The higher-level character not only has more gold, but dies less and has a much easier time making money later.
High level characters do not necessarily "die less" -- they adventure in more dangerous areas comensurate with their level, and therefore can die quite easily. As a low level character first starting out, I actually died very little, because I was cautious and played in groups and played smart. I actually die more often as a mid level because I take more risks than I did when I was a low level. Also, as far as making money easier, I would also quibble with that -- I would clear out the Vallaki sewers and sell rat pelts, and gather up and sell everything I could get my hands on, and could end up clearing 1000-1200 gp a night as a low level. Conversely, I've been in Har'Akir and gotten lower amounts.
Part of getting gold and xp on this server is simply getting used to the style of gameplay required -- once you realize how things work in this world, you can find profitable opportunities at every level.
One idea I threw out in the first post was 100 fang for every 1,000 XP the player has accumulated, or some other ratio. That would be a truly progressive rate and make death a bit more significant for high levels. That high levels have little fear of death is a recurrent complaint here, is it not?
Everyone has a healthy fear of death on this server, regardless of level, because it already does cost more for higher levels to get raised, even if they do it themselves (I stockpile diamonds for that very reason, just in case). I don't see a need to increase any sort of "death penalty" on high levels, because (1) that is not a problem that needs a solution (high levels are not running around dying with impunity), and (2) it does not serve as a functional gold-sink to take gold out of the system.
A functional gold sink would be something like mandatory training costs to advance a level (I have played on several servers that implemented this, with much wailing and gnashing of teeth on the part of the playerbase I might add). Storage costs and bank fees also function as a gold sink to take currency out of the system.
As I review this thread, I am struggling to identify a problem that requires a solution here -- at least a solution that is addressed by the suggestions being proffered. The accumulation of gold is a problem every server struggles with, but that does not mean that there must be punitive solutions imposed on the playerbase. The idea of "progressivity" you raised is just another way of saying "punish high level players", but I am not certain whether this is a solution so much as a bit of schadenfreude.
I am all for finding creative ways to take excess gold out of the system, but I think the real solution is to find creative ways for the playerbase to spend its accumulated wealth IG, rather than have arbitrary penalties placed on those who have worked for months (and possibly years) to get to a high level.