I agree with pretty much all of your points, especially about limited inventories. In isometric arpgs in particular it drives me crazy that half the gameplay is essentially a gambling system of explosions of massive amounts of items - yet they give you virtually no room to carry it? Terrible.
But on Morrowind, I love the game with mods like MULE, but the vanilla level up system makes the stat system self-defeating. The purpose of skill-based progression is to let me play the character I want to play, and do the things I want to do, and trust that my character is going to grow accordingly. But the level up stat multiplier system forces the player to do all sorts of things other than what they want, in order to get the most out of the stat system.
It’s even worse in Oblivion because everything levels with you much more in that game, which means if you don’t do these ridiculous things to min/max, your enemies can actually become too powerful to beat!
Recently finished one playthrough of Torchlight 2, so now I went back and am doing a playthrough of Torchlight 1.