First, just gotta say I love the idea.
I think encounters should be adjustable. Configureable. Turn them on turn them off, change the challenge, change the frequence, stuff like that. In groups encounters should take into account the level of all in the party.
Whoever said that encounters should reflect the area, that is also a good idea. This would make things like if you kill an elf in Tethyr forest and you get that nifty curse script that says Correllon curses you for killing an elf, when you are near elven territory you will get attacked more by elven hunting parties. Stuff like that. If you read the campaign setting its cool, like every hill or forest has some sort of tribe of goblins or giantst or hobgoblins.
More to come later....... sleep come now.