Here's a thought not sure if players or devs would agree to it or consider it, but why not have a system entrirely dedicated to combat instead of replying on fep and lp leveing to an unfair advantage.
My take would be that combat would only level up through 1 on few combat encounters. Either player wins and kills/knocks out the oppoment (player/animal/other), fails and gets knocked our or draw/runs away ending the combat mode (de-agros). (I think that's all of possiblities in combat) So out of those 3 depending how it went (that's up for debate and for devs to mess around) the combat "level" would level up.
So for example in base attributes strength no longer would determine how hard you hit or agility on doging or constitution for hard hit points or something like that and for abilities unarmed combat, melee combat and marksmanship would be placed under martial arts and combat school. Also I guess they would level up on depend what you used. If you used mostly or only a bow and arrow then your marksmanship would level up with other stats that could be new implemented or old moved from base attributes/abillitites to combat section or just renamed and added to combat section like for example dodging.
Sure the issues are msotly the same the botting, like people could just create 2 characters and duke it out, but there's a chance that they would lose their characters, so the system could be depedning upon like time used in combat/how long the battle took, moves used and so on. Also combat wounds/scars would also used to level up in combat/combat level.
It might seems more ludicrious, but Loftar/Jorb could try to test this in a seperate test client to see how it goes. Sure more hassle to code, but would be cool to have seperate system for every day acitivies and system just for combat, because now it's kind blend of all.
Also please make hearth magic part of the combat system or have a new skill combat magic. Not asking to have summing cicrcles and casting area fireballs, but anything that could be related to in-games lore and feel. Up to you Jorb/Loftar.
I guess this could encourage people to do more pvp and not just run away and take their take in combat. And for those who ask what's wrong with current system, well lp and fep points can just be easily botted to the extremes making it so you become OP in battle without even participating in a single battle. So this could make combat more revelant. Instead of having just eating and have numbers in hundreds. Not sure how this would work for group battles, but would be cool to see, well at least tested.