I am not a fan of the old XP system, and the level disparity is just one aspect of why. At higher levels (15th+) being a level apart is not a big deal, but at the lower levels (which is where it seems EVERYONE plays at) it makes a huge difference. Beyond that, it encourages meeting every challenge with violence as the biggest way to gain XP is through crits and kill hits. Every system of RP awarding I have seen people use is like "+100 for good RPing" which is pitiful and does NOT encourage RPing.
*shrugs*
Didn't we have such a discussion about how each GM rewards XPs already, several times even? I personally use a collaborative way (adapted from an existing RPG so it's not as if such a system doesn't exist in any actual RPG…) that, IMO, encourages toward RPing.
In this system, each player is given a certain number of tokens whilst the GM keeps half of the sum of all players' tokens. For instance, in my game, I have five players. Each player is given five tokens whilst I keep fifteen (roughly half of five by five = twenty-five).
During a game, every time a character (say, PC-A) is performing an action that another player (say, PL-B) or the GM considers deserving to be rewarded, its player (thus PL-A) is given a token from said player (here, PL-B) or the GM.
Every number of sessions (in my group, it's five) determined in advance, every player counts how many tokens he got. Every character then gets a number of XPs proportional to how many tokens he got, from a pool of total XPs, to which a GM may want to add some base XPs. It's important that the players know when the XP calculation takes part, because for the system to fully work, all the tokens should have been given when this happens.
For instance, in my case, the XPs pool is 50,000 and I give 5,000 base XPs. As there are a total of forty tokens (five by five from the players, and fifteen from the GM), each token represents 1/40th of 50,000 thus 1250 XPs. Thus, at XP calculation time, a character earns its number of tokens times 1250, added to the 5,000 base XPs.
From my experience, not only does such a system push players to try and perform interesting RPing and give entertaining experience to the other players, it also reminds them the GM (or the system, for that matter) is not the only one they should court, but the whole table.