Exhibit #1: After many repeated tries, I was able to get the cute dog formidable enough to take out steel golems and the denizens of the smc while level 23. I was on my way to pit him against the cat lord when he got mutated into a WMOPC by a trap (the result of which inherited all of the dog's levels).
Now I know the game is supposed to be a weird and wonderful place and perhaps the game shouldn't outright forbid such wacky experiments, but...
Exhibit #2: Level 153 quickling king vampire. Took out the great water dragon in 1 turn (3 hits). Yeah. It also later killed me due to a bug that i'll report separately.
I am sure I read on an old usenet post that companion levels were capped at 110. If that was ever true, it doesn't seem to be true now.
Exhibit #3: You can read about this in my most recent victory post as well.
Maybe the creator doesn't mind Ancardia being a place where shopkeepers surpass mighty dragons, balors, and gods, in which case ignore this, but I think artifact drops should stop leveling the shopkeepers beyond a certain point. Maybe also a si-specific change is needed.
Personally I think at the very least, an absolute limit on ALL npc's in any circumstances should be applied, as a safety net. Opinions?