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Player A has 99 mage, 99 defence and 99 Hp. They come out with a combat level of 200. Player A does not have enough runescape money for top tier gears (Seismic etc) and is utilising a full Subjugation robes and a staff of light as their weapon. Player A is using surge spells as their main attack.
Player B has 81 mage, 70 def and 80 Hp, They come out with a combat level of 153. Player B is using the best gear he can use, a set of Subjugation robes and a staff of light. Player B is using air surge as their main attack.
Now obviously both players are using exactly the same gear and exactly the same weapons/spells, however Player A is considerably higher leveled then Player B. In the case of normal pvp (wildy etc) Player A will have the upperhand and probably win (presuming Player A has more combat experience).
Now consider these two Players come into combat during WE2, lets presume that damage scaling is -1% damage per level difference to a maximum of -30%, some examples:
Player A: 200, Player B: 175, Player A's damage is reduced by 25%
Player A: 200, Player B: 100, Player A's damage is reduced by 30%
So in this case Player A's damage against Player B would be reduced by 30%, because both players are using the same gear and the same spell Player B will now steamroll Player A.
Both players are considered 'even' from a gears point of view, which is how eoc runs, gear = strength. However the idea of level difference being the deciding factor is post eoc, level hardly matters anymore as long as you have the level for the tier of gear you want to use. Thus penalizing a player purely on their level is entirely the wrong way about doing it.
That due to the way it now works however jagex placing a damage restriction on players purely because of levels is the wrong way to go about it.