A) Yes, it is bad. It is VERY bad to say "Oh, well, you can do this, but we're going to screw you over for doing it." Either make the game about superheroes or make the game able to do both, but not this half assed "low levels are weak and boring".
"Let's keep as much of the system intact as possible because we don't want to actually change it!" is not necessarily the best design goal.
B) No, what I want is to be able to play at the larger than life level comfortably. If I wanted to play strictly realistic, nothing-not-seen-typically-on-Earth humans, as opposed to realistic-but-larger-than-life-humans, I'd play GURPS, and avoid d20 entirely.
D&D does not represent that particularly well...it sprints past it on the way to superhuman.
It is perfectly reasonable to want to be able to play LotR-esque characters in a game system, and to be able to gain power slowly. Saying "the DM can vary the rate of xp gain!" is like all "the DM can compensate for the system being broken" things...it misses the point.
One of the reasons I have for wishing for something toned down is that a sufficiently powerful character will wind up as very hard to challenge. D&D characters simply do not have much in the way of weaknesses that can't be negated by high enough numbers.
For instance, if you have a character who can take on demon lords and win, then the character has massive powers to alter the setting. While I have nothing against playing Cuchulain in and of itself, or Hercules, or Gilgamesh or any of those kind of massively over the top heroes, when you have the PCs able to beat the most powerful beings of the setting, then any PC who wants to over throw Hell (or Heaven, for that matter) can. Big shock to the setting. No longer are the beings who have ruled for thousands of years top of the heap.
This might be a very good thing for an adventure where the players/PCs want to get there, but its not so good for a campaign like the one below:
Let's say I want to run a campaign where the forces of Hell/the Abyss are invading the world. Having the PCs able to one shot kill Orcus dramatically diminishes the sense that this is a Great and Epic Challenge, even for the Mightiest of Heroes. In fact, it flat out eliminates it. Heck, even if Orcus is a "Standard encounter" (the PCs will use up some of their resources and is likely to leave them hurt but not dead.), it ruins the idea that even the greatest heroes cannot (ordinarily) stop him.
And saying "well, you can make him even stronger!" doesn't help. That just means that instead of needing to be 40th level to one shot him, you need to be 60th or whatever. And if you keep doing that, you're winding up with a lot more calculation of "Is this tough enough?" than is really fun.
This really belongs in a seperate part of the rebalancing discussion than here, so if/when someone suggests somewhere to discuss it (as an issue with the game that should be addressed), I'll move it.