It seems to me that there's a useful lesson in thinking about the difference in gameplay that flows from having just a few levels (as in AD&D, for example) and many levels (as in many MMORPGs).
Namely, when levels come more frequently (because there are more of them), they become more of an object of focus by the player. The practical result is that players consciously focus on taking actions that will ding their character to the next level. Among other things, they spend time bottom-feeding for safe XP.
When there are only a few levels, by contrast, and the time between dings is accordingly much longer, my experience has been that players stop spending their time doing things just to raise their level and concentrate instead on just playing the game. Only when they know they're about to ding do they start altering their play behaviors to rack up cheap XP. The rest of the time, they're fully immersed in whatever deviltry the DM is throwing at them.
Isn't that latter kind of behavior what we should prefer in MMORPGs as well, rather than the mindless grinding for cheap XP that having lots of levels provokes?
The obvious objection to this is "MMORPG players clearly want their rewards on a more frequent schedule than in 10-level games like AD&D." OK... but who said that increasing a character level was the only possible reward? Anything that can be keyed to a level can be pulled out of that system and used as a reward for good gameplay. And the perceived value of each reward can be used to fix a ratio for desired rewards. Character levels are absolutely not the only way to persuade players to keep playing.
(For more on the subject of reward schedules, please see John Hopson's excellent Gamasutra article, "Behavioral Game Design".)
So my preference for Star Trek Online would be... do both. There would be only a few ranks, but departments (Science, Tactical, etc.) would have multiple levels. In this way there'd be the long-term progression in rank so that players wouldn't be focused on "leveling up to Captain," but they'd still have the possibility of achieving the shorter-term reward of improvement in their department if that appeals to them.
Specifically, there would be ten or fewer Starfleet ranks, each separated by a significant number of prestige points, and each offering unique rewards. That should provide the benefits of character levels without promoting the utterly mechanical level-grinding behavior that makes most MMORPGs the equivalent of running in circles (only without the health benefits).
In addition, departments could offer 40 or 60 or even 100 levels (although 100 levels could make skill improvement stupidly trivial). While I'm not wild about any kind of arbitrary magic number system for describing a character's capabilities (I much prefer specific skills), this could be a convenient way for players who like that sort of thing to measure their character against other characters. If advancement in one's department level is based on skills learned, rather than the other way around (which it could easily be), then even this concern is addressed.
Overall, providing a system of multiple character advancement tracks may be the best way for a MMORPG based on Star Trek to go.
