Having #7 would make it easier to know the "level" and add custom drops to every mob depending on their level.

We gotta give an incentive for players to risk their lives and keep exploring the world, right?
I think this could be an addon? Cause I think this feature is out the actual scope of the mod.

This idea isn't bad but:
The only way is to increase the current mob drop to just more for example: if it drops 2 rotten flesh -> drop 3 or more because I don't wanna have random item drops otherwise there has to be some datapack thingy where a lot of files have to get written for each entity to drop stuff when lvl x.
I don't like that a zombie for example can drop more than what is said in its loot table cause those items would flood the player.
It could be an addon yes but for those reasons probably not made by me

What about adding custom drops to a range of levels?
Something like this:
From Lv.10 to Lv.20 theres a chance to drop one diamond
From Lv.50 to Lv.100 theres a chance to drop netherite, maybe scaling the chanceFactor depending on the level?
From Lv.200 onwards theres a chance to drop a nether star

Either way i think this feature should be its own mod/addon/module