...take Oblivion or Skyrim and remove the scaling and have it work correctly. The decision to support that type of play, or not, would generally need to be made early in the dev process. But I think that thoughtful implementation of such a thing could be used well even in an open-world game.

Also not that it is possible to have a challenge that doesn't gate content. You could have a mission where you need to free someone from the stereotypical camp of monsters. If you encounter that mission at-level, then you can just fight your way in. If not, then you might need to stealthily set fire to things, hire some mercenaries to distract the guards, and sneak in.

Or perhaps there is a random chance of a town getting attacked by raiders. If you're in the town, you can either fight them off, or hide like everyone else.

Obviously there are a million game design questions and problems that arise from this sort of thing, but the concept is perfectly sound, even in an open-world game where you don't want to gate content.