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The XP Cap: A Flaw in the Game's Design

Okay. So I'm playing the EE, having a grand old time with Dorn, Montaron, Shar-Teel, Viconia and Baeloth. I started by moving in a straight line from the FAI to Beregost to Nashkel, completing any quests that popped up along that route; after the Nashkel Mines and the Bandit Camp, I cleared every "miscellaneous" map (ie: Dryad Falls, Gnoll Stronghold, Gullykin, Ulcaster, etc.) and then I proceeded through Cloakwood. At the start of chapter 5, rather than head to Baldur's Gate, I diverted to Ulgoth's Beard and completed all the TotSC content. (I don't consider this sequence breaking simply because Ulgoth's Beard is accessible at that point.)

My party now stands at the edge of Wyrm's Crossing, ready to enter the city. And here's the problem: the entire gruop has hit the XP cap of 161,000. I have absolutely no reason to complete the many, many side quests in the city because there's nothing to gain - only four pieces of loot could benefit my party at this point (Ramazith's Metaspell amulet, Degrodel's Helm of Balduran, Black Lily's Dexterity tome and the Wisdom tome from the Lady's House).

As I see it, the issue is one of effort vs. reward: if my NPCs can't gain any more levels and they already have the best equipment the game can offer them, I can't see any reason to bother with the massive number of tasks in the city - my party is at its peak and literally can't improve any more, might as well just charge Sarevok and wrap things up.

Has anyone else encountered this problem? Would it be resolved by raising the XP cap?

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