... I hope it remains as a generational gimmick. Directionless open world is a massive joy-killer to me.
Doesn't have to be directionless. Take Johto as an example, where you're free to go either East or West after Ecruteak. The game's level curve goes flat for a long while to accommodate both options, and the game really suffers for it. A bit of level scaling could have done a lot to make the games more enjoyable whenever you reach a fork in the road - which is to say, the designers can feel more free to put some forks in the road. The forks can eventually meet again, to make the overall story linear, but letting you choose which order to do things in. I imagine it could be used well for, for instance, letting you pick whether to take on the Grass or Electric gym first, as long as you do both before the Steel gym.
If the scaling works by shifting levels only, and not Pokémon evolutions or movesets, the best way to apply it would be within smaller chunks of the story. It would be weird if a trainer battled late used Geodude with Tackle and Mud Sport at level 65, while you could take on a level 10 Golem with Earthquake and Stone Edge if you took another path. However, a Graveler with Rock Tomb and Magnitude could work just as well at level 30 as it would at level 40. As long as the scaling is kept within a carefully defined interval, it shouldn't be necessary to adjust more than the Pokémon's levels to maintain a relative level of challenge in a scenario with more paths to choose between.