I'm really starting to thinking that allowing free grinding like I did in Loren maybe is not a great idea... even having "level scaling" enemies/encounters, it's hard for the author to balance everything (usually people doing RPG like Bioware have like... 50 testers testing daily and report problems to the coders!).
In Planet Stronghold I allowed grinding but everything was calculated. I mean the amount of possible EXP you get from grinding was fixed, there were semi-random encounters but was a finite number, and the encounter weren't random (only the position on the map). So in Easy mode you could fight the plot-advancing battles without grinding, while in Hard mode it was almost a requirement. This way though I was able to fine-tune each battle, since even with the grinding the party level/skills was within a certain range.
Of course I am also a player, so I know that is fun to exploit game bugs/cheats/weaknesses
I like when I find a way to break the AI and I yell obscenities in front of the computer. But allowing unlimited grinding could even result in totally unbalanced battles later in the game (especially in a loooong game like Loren).
So for the next RPGs, I'm thinking about what to do. In Planet Stronghold 2, after talking with the coder (Anima) which was the first one to warn me about the grinding problems, we're going to allow random battles but the amount of XP you'll get from grinding will be very low, the reward will mostly come with other game assets (resources for cratfting mostly). I think that idea is cool, so you still get some XP if you grind, and some other form of reward, but prevents the battles to become unbalanced.
Anyway, next RPG framework has even AI autobattles so I should be able to instantly test if a battle is too easy/hard