This was supposed to be an email to dem bones and Professor Pi, but bones told me to node my comments instead.
Remove content, and get rewarded
The proposed system has another major flaw in that it is much easier to "game the system", than under the old system. Particularly in negative ways. As it stand right now I would lose 2 levels (whine, whine, suck it up I know). But I could instead only lose a single level, simply by nuke requesting all my negative rep nodes (which there is largely nothing wrong with). So I could be rewarded by removing valid content? That is not good. Doing some math now, I could remove all of my negative and zero rep nodes and be only a handful of rep points away from not losing a level at all. I ask you, is this what we want? Update, by removing all of my 1 rep and below nodes I will not lose any levels at all.
A troll a day keeps the levels away
With the new system serial downvoters/trolls can actually effect someone. Say I decide to take a disliking to some random 10th level noder. With a weeks worth of votes, I could make him lose a level. A high level noder could vote someone down a level in a single day. You might be thinking "aw, no one would do that". Yes they would, show a troll that he can be effective, and he will put three times the effort into his trolling.
Rise to the top, with political pot smoking lesbian daylogs
The new system can be very effectively gamed by only writing about subjects that will assuredly get massive upvotes. That is, daylogs, politics, drugs, and sex. Do we really need even more of this content than we are already getting now? And if we do need more of this, should the people writing it be lifted above factual noders in the pecking order? I ask you?
Why should I vote?
A lot of E2 users log on every day simply to use up their votes. I would go so far as to say that over 60 percent of the votes cast are voting for XP. Take away the reward for voting, and you take away the votes.
How to win friends and influence people
Another thing is certain noders are, well, popular. Anything they write is going to be voted to the sky. One of my favorite E2 people (I won't mention his name) has a median rep of about 8. But a good 70 percent of his nodes are cut and paste works. So, should being friendly and well liked, mean that you should get free levels? Once again, I ask you?
Solutions are simple. First, set a number of upvotes and downvotes per day. (I am 9th level, perhaps I would get 90 upvotes and 15 downvotes). With no one getting any downvotes at all until 3rd level. This effectively removes the ability for a single noder to "vote someone off the island". Why no downvotes for second level you might ask. Simple, it is too easy to make an alternate account, and get it up to second level in a matter of days. With this change, bad nodes will still get voted down, while almost eliminating serial downvoting. (You might ask, should gods and editors get more downvotes? My answer is no. You have the nuke button, if it is that bad, you should use it.)
Secondly, set a cap for the median number. To prevent people from getting to the top from daylogs and blowjob nodes. The exact number for the cap would have to be discussed. This would also very effectively minimize the popularity bias.
Third and final. Provide an alternative means to gain levels based on much higher XP totals. This is mainly so factual noders will still have a way to gain levels, without resorting to rep whoring. This also still give people a "reward" for voting, that they would otherwise lose.