Are class and level systems utterly incompatible with heroic fantasy? One of the major "problems" with D&D, after all—"problem", that is, in the "bug/feature" sense—is that the player characters go from chumps who can be killed with a sneeze to deities who can raze the campaign world on a whim. The astonishing disparity between even 1st and 10th level characters was no doubt what prompted the creation of many other RPGs that lack any sort of advancement mechanic or power curve.
I don't care for those other games. I think I'm in good company here when I say that. I don't want a game where combat ability remains static and the characters perpetually can take about five wounds before dying, or where the whole notion of advancement is horizontal, i.e. all the characters progress from having a handful of skills to becoming über-bards, because the game doesn't offer much else. No, there's something ineffable and compelling about classes and levels that we really can't dispense with.
Sometimes there are house rules to flatten the power curve. Like, characters have a few hit dice rolled at 1st level, but then only +1 or +2 hit points gained thereafter. That would do something to reign in the awesomeness of high-level fighters, but then you would also have to pretty much re-write the magic system so that the damage didn't scale so high. And then do the same thing for monsters. No, the so-called "grim-'n'-gritty" option doesn't really help, because it would involve re-writing D&D. If you wanted to keep the hit point totals small and the spell ability weak, the best option would simply be to limit character advancement early, à la the "Epic Six" idea.
But I get ahead of myself. When I said "heroic fantasy" up at the top of this post, I was referring to something rather specific that merits definition: I meant the sort of heroic fantasy that one sees in fantasy novels, where there isn't much of a sense of "level gain" or "power curve". Yes, characters in those novels get more competent over time, but they hardly ever go from being mooks to unkillable gods. So if I wanted to replicate the feel of a fantasy novel in an RPG, would I be forced to abandon my beloved D&D and use one of those hateful other games?
I don't think that's necessarily the case. I think one could create a very proper sort of heroic fantasy game out of D&D, with only one simple tweak. And I wouldn't even need to alter the pace of character advancement.
We have to remember that first off, D&D was created as a game to simulate fantasy in general. Swords & sorcery novels, yes, but Lord of the Rings too. The plots and motivations and moralities might be worlds apart in these two genres, but mechanically, the heroes of both are equally mortal, equally vulnerable. High fantasy heroes are no more eager to rush into a needless fight than pulp fantasy heroes, because fights get people killed. The uncertainty of the outcome will stay a rash soldier of Middle-Earth just as surely as a self-interested tomb-robber of the Hyborian Age. So, I think, the way to make D&D feel more like a fantasy story (of any genre) is take away some of the players' certainty of success in combat.
You would do this by hiding their characters' hit points.
The curious thing about hit points, of course, is that they don't represent wounds. A character who has 1 hit point isn't running out of blood, he's running out of luck. And luck isn't something that the characters themselves can quantify or gauge or use to help decide when they should be retreating from the dungeon. "Well, my luck tank is running out of fuel, better go back to town and sleep for a few days." The characters might retreat because they're tired, low on spells, low on food, or just plain paranoid, but hit points are a players' consideration only. And if I want to immerse the players in the game-world, make them think like their characters, never truly certain of when their luck will run out, I have to keep their hit points (as, indeed, I already do with most other statistics) secreted behind my DM's screen.
There are logistical problems to overcome, no doubt. Players are going to bitch and moan about not being able to see information vital to their characters' survival. It would behoove me to be generous with descriptions of characters' relative states of readiness, "i.e. you're feeling pretty winded right now, and kind of shell-shocked; rushing into another battle today is the last thing you feel like doing." On the positive side, "cure wounds" spells and "healing potions" would have to become something else, something less overt in their effects, like "restore breath" spells and "fortune-in-battle potions". Whoa, that last one is pretty cool: "'Fortune in Battle', this magical effect restores 1d8 hit points, not that the player characters will know that." Definitely cool.
Okay, time to quote Farscape.
"John Wayne? No. The big guy. TRUE GRIT, THE SEARCHERS, THE COWBOYS, GENGHIS KHAN. No, look, forget about GENGHIS KHAN. Everybody makes a bad movie..."
—John Crichton, episode 1.4 "Throne for a Loss"