Since the thread's been bumped . . .
No, there should not be any progression. Too many problems with it.
My own view is that progression in a game is a substitute for an increase in player skill gap. Games that are commercially successful because of their progression (as in, would not have been successful without it) are the games that are designed to be far more accessible to new players. They permit those new players to learn and become proficient in everything about the game very quickly, which makes having better stats and better stuff the only way to significantly improve a player's performance. It's a model that works, but it's not one I want to play. For me, a great part of NW's appeal was the fact that somebody who just bought the game and is launching for the first time gets all the same stuff a long time veteran gets, but the combat is difficult enough that the long time veteran can beat the snot out of the new player. There's a significant skill gap independent of any ingame progression.
That said, even if it were proven to me that the gameplay would in fact be better with progression than without it, I'd still say no because of the ambiguity of acquiring it. If you could progress by playing the game whenever, wherever, the top ranked players are all going to have been the ones sitting in their private server poking away at each other to grind out levels. If you tried to solve that by only allowing progression on official servers, you're effectively punishing people who only get on to play privately held events (I've seen a lot of people trying to measure the NW's popularity through pub servers - that's unreliable given how much of the game's population show up twice a week for an hour and never play the pub servers). I do think part of NW's ability to retain so much of its playerbase for so long has been the preeminence of private servers. Much as I loved old NA1, it was better for everyone that the ten-thousand people who get seizures if they don't use a slur every twenty minutes had other places to go.
Which is all to say that progression introduces more problems than it solves.