I think the main problem can be prevented either way - just don’t give ANY XP for killing people or animals! I knew that some people might hate this approach but it has its benefits.
Let me explain it in detail why it could be benefitial:
If killing opponents grants no XP for leveling people are less interested in grinding (aka killing as often as possible just to gain XP). This also fits the game quite well since to me a “realistic game” is not only about the lack of dragons but also about the realistic display of mental states and proper realistic psychology. A knight or warrior in medieval time wouldn’t go out in order to kill everyone around. That’s the behaviour of an ill-minded mass murderer and not the behaviour of an actual normal person living at the time. So in the first place, a system which doesn’t grant any XP for killing people or animals would indirectly reward realistic roleplay: you only fight and kill because you have to, either because somebody attacks you or because you have orders to kill somebody and have to follow these orders. Killing enemies would be about survival and about roleplaying and not about grinding or exloiting the system. With a well-done combat system like you’ve shown us it could be as well just be for fun or for the challenge. But the indirect force to kill as much opponents (or innocent people!?) as possible would be taken out of the equation…
Another benefitial aspect would be the absolute freedom for you as designer where to put enemies or animals and how to individually adjust respawning times or systems for them. Since you don’t have any danger of “breaking the game” by placing too many or too less enemies or by placing too less powerful enemies anymore you have one worry less while designing the game. Opponents and enemies wouldn’t be located in order to prevent grinding or to give enough “farming material” but in order to make sense in the world and the story. Their placement and respawn system could be better adjusted to the the actual roleplay systems, the story and the environment. And of course also to realistic and logical cirumstances (natural repopulation, arrival of new mercenaries, strangers coming to the town and stuff).
So how to level up in the game if not by killing enemies? Simple: by fulfilling quests. As far as I know Kingdom Come Deliverance is an RPG at heart, relying on storytelling and questing. That would offer enough possibilites to reward players for progression. Of course that would prevent any grinding strategy known from other games of the genre. If some people like that (for whatever reason…) they would perhaps be unhappy about a system like that. But overall I think it would be benefitial for a game like Kingdom Come.
And with some creativity, you could even bring some realism to that “questing leveling”. Personally, I’m quite a fan of the way Gothic 1 and 2 introduced the “skills by trainer” system. Few games did this since then but I think it has some strengths. That way the designer can quite easily control when certain skills are available in the story. Example: if you want to learn professional sword fighting from the captain of the guards you have to fulfil some quests for the townsfolk or the local landlord first. Only after that you gained enough reputation to actually become able to perform that training. A system like that could even work without any XP after all or as a combination with quest-XP. In that case each quest would reward you with XP which you could then invest in further training at various teachers/trainers at a given predefined time in the storyline.
Short: A system with
- killing without any XP reward
- questing with XP reward
- learning new abilities from teachers not before a predefined time in the storyline (for XP a/or gold?)
would give you the most freedom AND control as a designer to make the best (story-driven) RPG possible. And it would mean that respawning wouldn’t even be a big issue anymore. Respawning would be just another system to match the realistic scope of the game, following the internal logics of the game instead of restrictions coming from player behaviour and progression control… 