Although it is an interesting concept, its use in Destiny left a bad taste in my mouth. In that game, the max level was 20, and you could advance your level up to 34 by equipping better gear along the way. Although it makes grinding for gear more of an emphasis, in a game like The Realm, that might put too much of an emphasis on grinding dungeons which was only one aspect of the game. Personally, I liked the concept of levels and when you hit the "zenith of your career and want to start considering retirement," you can choose to further grind dungeons of become a full-fledged townie. Soul-binding mechanics would take away from the trading aspect of realm, which was quite solid.
All in all, it is a good idea. I am just worried it will take away from the social aspect, which is what I loved most about the game. Get powerful gear by dungeon crawling. Get powerful gear by actively trading with others. I like the thought of having both options.