All this talk about balance sadly reminds me of MMOs. True RPGs are about making choices and dealing with the results, simulating mechanics of real life through lenses of fantasy. Life is not balanced, if you do certain things you'll be more prepared for what comes ahead. The amount of XP the game expects the character to have should be a very flexible thing and not a hard mechanic. If you fought more, then you'll be more prepared to the fights to come and not: "you should be exactly level 8 or 9 by the time you face this enemy". Making this would make a game that feels artificial, "unRPGlike"
I think the realistc aproach is the better one: Practicing makes you more experienced, completing tasks gives you rewards. Every time you fight you should be given experience, it would be the most realistic. Also, practicing anything should give XP: Diplomacy, stealth, puzzles, survival, etc... Binding experience to quests only seems extremely artificial and very un-RPG-like. One of the characteristics in common with all IE games and most successful RPG games is the combat XP. Getting rid of that would be tampering with a mechanic that's working fine.