If I ever do design a class/level-based RPG, I definitely will take the step that AD&D took from OD&D and expand on it. In OD&D, "elf" and "dwarf" and other things we know of as races were classes. The job-based classes were humans. Every elf was the same class, "elf."

AD&D made class and race separate things. AD&D 1e and 2e tried to have races of varying powers paid for by EXP penalties.

3e used LA and ECL to try to sacrifice levels for more powerful races.

I'd approach it differently: everybody would have a race and class, and both would level up. It's akin to Savage Species monster progressions, but gestalting them with your class, and every race having them. So a level 20 dwarf would be more iconically and powerfully dwarven than a level 1 dwarf, regardless of their classes. And, ideally, level 20 dwarf and level 20 dragon would be similarly potent.