With every single Ultima game you played the same character. And you know what, you always started over at level 1.
No one bitched that the Avatar lost his powers. It was accepted that you needed to start over for game balance reasons. Ultima IV-V-VI did allow you to transfer a charcter if you really wanted to keep your level, but in those games, power wasn't that important.
The Exile is also a powerful war general who starts at level 1 despite his past.
You get over it.
The MOST IMPORTANT factor in a game is not realism. It's having fun.