Not entirely sure why they can't make characters levels scale when in a group.
PlayerA = lvl 20
PlayerB = lvl 25
PlayerC = lvl 12
PlayerC's level scales up to 20 when grouped with the other 2, given his skills, health and armor a bonus relative to that level. Leveling then becomes about seeing the content, gaining skills and achieving the level requirements for quests, mounts and other things, as the level is set according to the majority of the group. The person obviously still gains experience based on being lvl 12, and will ding 13 not 21
Scaling wouldn't work in raids either
There are many ways to get around the current problem, and I agree more tools aren't going to help, instant transport won't really help either, the problem is the spread in levels of the small number of people playing.