I was initially hostile to the idea as well Thorbinator, but I think there might be a way to balance it.
I'm totally against the idea of standard MMO persistancy where you remain objectively powerful everywhere you go and can gank noobs like crazy.
What I'm for is a subjective system where the server 'ranks' players depending on their prestige, for each side, so that the equipment and possibly skills are actually equal. So you put your time in and get a decent ratio of team wins/losses, you're more likely to become a knight or sharpshooter or what-have-you as the strongest class in your faction.
Then again if you come onto a server where your side is outnumbered or outleveled, you're also more likely to become a knight or what-have-you because there'll be less higher-ranked players above you.
Should you be on a server where there's lots of high-ranked players on each side, yes a new person would probably be stuck as rabble (albeit with a useful, very lethal weapon-- like a pike that used well can kill an unwary charging knight, or a crossbow that can score a challenging shot and ding off a great deal of their health). But, because the degree of XP / gold / prestige gained by winning can be much higher in this 'balanced' mode, your higher-level allies should take a keen interest in keeping you alive. Intelligent high-ranked players should see the value in shepherding and improving the effectiveness of newbies on their team, because with combat being as lethally fair as it is, even peons count!
This fits with the concept that I envision of medieval warfare where knights would typically feel themselves above the act of fighting mere rabble, mere peasants (even trained soldiers). They would naturally want to bring their own rabble and trained soldiers to fight, so that they could focus on defeating their equals. Similarly, if there's a lot of knights / noblemen showing up to fight, then your own knights / noblemen would spring into action to try and gain glory in war-- perhaps take a few prizes to sell for ransom and increase their prestige even further. That is the way in which I see medieval society and its caste system, resulting in balanced battles-- at least when it comes to skirmishes over minor objectives, which most battlefields so far are.
Furthermore, a larger army would typically be slower, while a smaller army is more maneuverable. Right now on M&B Singleplayer world map, obviously an army of knights with high pathfinding has good speed and is incredibly strong. BUT, if we assume in Warband that everyone's got wagons or stable horses inbetween fights, it would figure that inferior armies would always retreat and successfully at that.
Thusly, we end up with yet another explanation for why these battles would always be evenly matched. The opposing generals always assume that they themselves are craftier than their opponents, thus, in an evenly matched battle they may very well both charge into the fray and battle to the bitter end! And so, we have an utterly thematic reason why armies of roughly equal power, and only armies of roughly equal power, would fight!
Certain battles, however, could be slanted deliberately to one side, like proper sieges where the attacker is at great disadvantage. The current Castle map really just mildly inconveniences the attacker-- no boiling oil or flaming tar pits, spears jutting through murder holes, no moats with spikes on the bottom. But, once we have really well defended castles, it would be expected for the attacker to bring far more troops. As the besiegers, they have that right! Ideas for well-defended castles without extra coding for boiling oil, murder-holes or spikes--- simply multiple battlements with fall-back positions. Make it difficult for the attackers to just charge and slaughter the defender before they can fall back, like perhaps make the ladders more obvious and slower to go up so they have a warning-- after all, the attackers are going to outnumber the defenders, defenders need every advantage they can get to make things interesting! It was expected in siege warfare, generally, that 3 attackers would be necessary per every 1 defender, or else they'd have little chance of victory through conventional tactics.
The point of all this, of course, is to simply make a scenario that's slanted massively to one side in numbers, enforced by slanted population limits, to add variety to multiplayer.
Speaking of the overall balance between higher levels and lower levels. Weapons shouldn't get much better as you go higher up in the ranks, because really, they just didn't get /that/ much better in effectiveness with medieval technology. A simple spear be it in the hands of an infantryman or light cavalry can still kill a knight, as could a bodkin arrow in the right spot or a crossbow bolt. This is how it is right now in Warbands, and I like it. A naked peasant with a standard spear, if he uses it right, can slaughter a knight with the best armor.
As I see it the main difference between the social classes in medieval, was the sophistication of their armor. Padded cloth is a given, leather was very cheap, and stiffened or reinforced leather while slightly more encumbering was also cheap, but effective. Leather covered in metal rivets or scales starts to get spendy. Hard metal armor was really quite expensive, especially things like platemail which had to be specifically fitted for the wearer and could take years to have made. Chainmail takes a great deal of work and craftship, but is worth it as you can layer it over padding and get good all-around protection without sacrificing mobility. An archer would need to be either quite wealthy or have wealthy ancestors to pass down a fine suit of chainmail, and even then, a well-aimed arrow could be lethal-- just less so than if he'd been wearing hardened leather or nothing at all. A man in platemail, would very likely be some form of noble with wealth beyond the wildest dreams of the common folk, and yet charging another knight in a joust during war, he could die in an instant.
How the balance would work team-wise, is that knights (or very well-disciplined pikemen or rabble) would naturally be needed to kill other knights, and they because they want their team to do that would be their primary vocation. Rabble is needed to fight other rabble, lest the numbers of them overwhelm highly trained but much less numerous skilled troops. Rabble would be especially vulnerable to archers, who in turn can be most readily defeated by light infantry using shields or light cavalry if the archers are in the open. Even without 'hard counters' or a strictly enforced rock-paper-scissors (which I don't want to see in M&B either), we just naturally find that it's best to focus on defeating our equals, and so we get equal battles assuming that both sides are organized and using the same tactics (which most times isn't so, which keeps things interesting!).
So, this idea of ranks and privileges could actually ENRICH the game, rather than cheapen it, which any persistant-progression system threats to do.
By playing often and playing well, you can rise in the ranks faster, but you'll always be squaring off against equals in the grand scheme of things, and only your skill will tell the difference. So what if you play often... your opponent will have roughly equivelant abilities and armor. You can be charging a knight whose only been playing a week because his team is all low leveled, while you've been fighting for months... yet the victor is decided in that moment when the lances strike..
So what it comes down to, is even if you play morning noon and night and grind the hell out of it, it still comes down to skill. You'll have time to hone that skill, but when you beat your equivelant on the other team, you'll know it's because you fought better in that engagement. Not just, you've grinded more ranks.
edit: I could see this working with the standard classes in a much simpler fashion, just by changing the reward system. The highest ranked players would either gain gold the fastest or start with better gear. Each team would have the same number of higher ranked tiers filled, players would only be compared vs their own teammates. Prestige growth can be just a flat amount given to the whole team, modified by individual player accomplishments. A character who just goes totally rambo and kills ten enemies would get 2 or 3x the experience for the fight as a player who died without getting a kill. Since that dead guy still soaked up a few shots and served as a distraction, he's still allowed to advance a little. If his team wins, he still gets a better win/loss ratio and can therefore rise in rank.
Note that the bonus for defeating a team that's smaller and less ranked than you is less, and defeating a team that's bigger or higher ranked than you is more. SO! If your team actually turns out to be better organized, luckier, more skilled in a round and wins against a 'superior' team, you can rise in rank faster, and eventually, achieve the same rank, whereby each team defeating the other would gain the same amount.
So anyway, the players who put the most time in and help their team win, will get perks. New players have something to aspire to, and they can raise faster by defeating players who have more perks than they do, thus making it a bit of a meritocracy. Everybody happy, yeah?