This same basic issue was what I was trying to address with this thread here, so maybe something to look at: Combat needs a knockout state - #3 by Hieronymous
Basically there’s an inherent dichotomy when using level-up systems; the longer it takes to level a character up to max, the harder it should be to “lose” the fully leveled character, and vice versa. You can either have disposable soldiers with a high churn rate or elite soldiers that are very survivable.
Zero level requirements on gear is taking the high-churn-rate approach, which isn’t inherently bad but does have some drawbacks (as spelled out by yshan above). Conversely, high investment of time / long levelling time characters need to be more survivable (and, ideally, recoverable, which is why AD&D has resurrection spells).
Right now the combat is essentially a “permadeath” system, although you can save and reload – top level characters can die quickly over minor tactical errors and there’s no recovery short of reloading.
Another issue is that there are basically two groups of people playing the game: people who want to build fancy things (the minecraft crowd) and people who want to play a RTS (the Warcraft crowd). And everyone playing this game is falling somewhere on a spectrum between those two poles. So there has to be enough challenge to the game to satisfy the Warcraft players, without destroying the game for the Minecraft players when their dudes all get wiped out halfway through their big project. Peaceful mode helps with this of course but that doesn’t solve it for everyone – if you’re building Coolest Fort Ever, there’s no point building it in Peaceful mode!