When playing Silver, I found going to the Kanto region a huge letdown. One was all the lower level pokemon, as you've stated, but also because I just thought it was stupid that I had to collect a whole new set of badges + final battle after beating the Elite Four. Upping the level cap will only result in more grinding, which is tedious as is.
I like your idea of having wild pokemon scale, but the whole point of Pokemon is to travel in search of more gyms/stronger pokemon. Thus it'd be better for the wild pokemon level to scale to your badge level--maybe the players could be given the option of whether they want their 8th level badge to be from Giovanni in Viridian City or Claire from Blackthorn city etc.
I'd also like to see the conflict with Team Aqua/Magma/Rocket/etc develop more. It makes sense that after obtaining your badges, defeating the elite four, and obtaining a Champion title that the leaders of the Pokemon world would ask for your help in thwarting the plots of these criminal gangs. Along the way, you would fight against/along side the champions of the other regions.
But this has an entirely new story arc and is an entirely new game. I'm wondering if it would be better if the Pokemon League was an online site people could import their Champions/winning lineups to. They could be contacted for periodic events where they need to work with other Pokemon Champions to thwart the efforts of the elite evil Pokemon organizations. Players would be able to upload their Champions from future pokemon releases as well.