Apparently, you haven't even really investigated how the level up system works. Each skill is represented (Pistols, Lockpicking, Environmental Training [items], coughSwimming), and as you accrue points through exploration or completing objectives, you can increase those skills. For all skills, when you increase the level, you do that activity more efficiently. For Medicine, for instance, medical kits replenish more health. Weapon skills become more effective, as your shots are more accurate, do slightly more damage with each level, and you reload quicker. Higher level Lockpicking requires fewer lockpicks (as they are disposable), and you can pick locks faster. I'm sure you get the idea.
The inventory wasn't too clunky, given that it uses the Diablo-style model (grid). It is large enough to do what it needs to do, and such. If you really have problems with the inventory, maybe you should play the PS2 port which eschewed the grid inventory to deal with weapon slots and such (e.g., one rifle class weapon, one pistol class weapon, etc.). Granted, I don't know much about the port, other than it was simplified (which you seem to be yammering on about being better), and somewhat suffered for it.
Still, you seem to be determined to create a nice self-fulfilling prophesy, so don't let me stop you, I suppose.
