LG: My bad, man. I just get frustrated as I cannot seem to find anyone of similar mindset, and certainly not to game with in my area. Also, it sounds like your ideas on NPC levels are fairly close to mine; the example of the local militia sounds good to me.
Sure there would be restrictions and some nations would be more strict than others, but you also have to take into consideration the extremely dangerous world in which these people live. (The only reason our world is more dangerous overall, is due to the presence of nuclear* weapons; on a day-to-day basis, most of our world is much less dangerous than the typical fantasy world.) A small group of trusted individuals are not enough when every settlement you have is threatened by: orcs, goblins, dragons, manticores, displacer beasts, winged panthers, great boars, horse vipers, ihl wolfs, strider birds, tatzelwurms, hydras, sea serpents, chimeras, darkhunters, ice spiders, minotaurs, mist monsters, panthersharks, thraxx (I really dig these guys), will 'o the wisps, demon whales, hippocampus, mercats, nators, raths, red jaws, spinesharks, spiderbats, winged eels, banshees, blacksnakes, harpys, griffons, roc, sirens, sky sharks (hey, these guys don't need a tornado!), viperhawks, winged wolves, and all the things that can be summoned from other planes or the other peoples that inhabit the world with humanity.
Trust me, I have thought about this topic a lot over the years. Sure you would have those nations** that are really strict and all of that, but then you would have others that aren't - just like now. (And it is a much different beast keeping a physical item out of peoples hands than ideas and knowledge, which has been shown in our own history.) And when your family's survival is likely predicted upon you being able to kill the beast breaking down your door right NOW, you might be inclined to make sure you can.
*Of course, there is nothing saying that there isn't the magical versions of such weapons.
** I don't think that you would have these nations spanning tens of thousands of square miles, or more, in such a world though. I think it would be more like city-states and large tracks of wild lands. Largely because, unlike in our world, the wild lands would actively resist our encroachment.
Edit: Got this thread confused with the magic affecting your game world one. D'oh!