It's not a blight but it's not an AWSUM design element that must be preserved at all costs. All it does is encourages you to kill everything that can be killed because XP is the most valuable resource.
OK, so instead you get a limited amount of XP, right?
The amount of XP is usually limited one way or another (unless the monsters are respawning). You have 3 areas filled with monsters, they add up to a certain amount. If you want to get 100% you hunt down every monster.
Thus it's not about limiting XP but deciding how they are obtained and changing the player's motivation. If the focus shifts from mindless killing to quests and goals, I don't see it as a bad thing, at least in RPGs that offer more than hack-n-slash.
Fuck yeah, you stopped grinding monsters and you started grinding quests. Sure, you might be one of those who think solving quests is an intellectual challenge for the monocled gentleman while combat is for the dirty peasants, but technically, it's the same thing: you do it for XP.
If the quests are shit, yes. And no I don't think that quests are an intellectual challenge but I definitely enjoy well-written quests with multiple solutions that create atmosphere and expand the lore a lot more than clearing maps from lions and beetles.
So, you stop those who will kill everything for XP, which apparently are a very important part of the gamers and need to be catered for and nobody else matters and instead you force everybody to follow your oh so carefully designed and balanced path(s).
See above.
It's not about careful design and balance (well, can't speak for Sawyer, so I'm talking theory here). The way I see it, either you place 20 monsters on a map, adding up to 1,000 xp, and let the player decide if he wants to kill all 20, or you do 5 quests (involving combat), adding up to 1,000 xp, and let the player decide if he wants to do all 5. For me, it's quality vs quantity. If I have to kill 20 monsters, give me a fucking reason (aka a well written quest). Don't just place them on a map and tell me 'go get 'em, son'.