Puzzle Quest's system was ok.
For example
A goblin is level 7 when you're <7
when your level is between 7 and 12, goblin's level is sclaled to your level.
And when your level is >12, Goblin's level stuck at 12.
So it's impossible to see a Uber-Goblin in Puzzle Quest. How ironic that a simple puzzle game handles the level-scaling system much better than a game like Oblivion.