My idea is to make LA a exp penalty for a number of levels beyond 1st equal to the LA? The penalty would be 10% per 1 LA. So a drow would gain a -20% exp penalty threwout level 1-3 (1+2) representing the ease it has in surviving at that level, but the penalty would fade at moment they hit level 4 where encounters begin to be a potential threat. There comrads would be level 5-6 by then, and they won't suffer late game because 2k-4k exp means nothing at higher levels and they will slowly catch back up.
Thoughts? While this issue does not fix the pain that is item crafting/exp costs due to lack of precious exp, it does address the issue of mid/late game "empty' levels being so absurdly difficult. Of course, allowing a +1/higher la race at character creation is always up to the DM, and sadly I can't control that with any houserule rule.