Rule Wise:
I feel that the diminishing returns of skills helps in a large part to resolve the problems with high level characters. When a 50th level Fighter is deciding where to spend his hard earned DP's (It took 2 million points to get to level 51 btw) he may not be too inclined to spend a hunk of points buying ranks galore to move his OB up a while 2 points. Higher level PC's are more likely to branch out with skills. Fighters might learn some magic spells. (it'll take him 5 levels to get 10 more OB, but a couple levels buying spells and he can get a +10 OB spell)..
In combat a A crit can kill, and a really lucky Kobald with a rusty spook can kill even the highest level knight.
Because of diminishing returns on skills a level 20 fighter can hold off a level 50 fighter reasonably well with heightened parrying.
Story Wise:
To me, a really high level character is kinda like a superhero/villan. He isn't likely to do run off and do mundane little adventures. He'll only go into action when the stakes are high... the opponents really tough, and the prize amazing.
If a high level PC is the servant to a lord, think of the PC like a battleship. Ships so huge and expensive, that while they're (minus aircraft) almost guaranteed to win in a conflict, the loss of one is so devastating that the reward has to be massive to risk it.
Where as the common leveled character (<25) might go on a number of adventures a year, a high level character might only go out every couple years.
When it comes to conflict... high level PC's may rarely fight moderate level opponents. They may simply step aside, realizing they are no match, yielding way for their high level master to do battle.
The Big Exception
The almighty high level spell user. Not only can some high level spells get scary, (correct me if I'm wrong here guys) the spell resistance table is based on comparative levels. Where a level 20 fighter might hold off a level 50 fighter (and three of them pose a pretty reasonable threat) a level 50 spell caster is going to be casting almost unresistable spells on the low level fighters. 3 quick castings of absolutions and a cleric can fend off lower level opponents with relative ease. (of course if they close to melee range he may be in trouble).
