So that's the traditional state of play. Now, in my experience this is not a balanced situation, not at all. The problem lies in the fact that no campaign I've ever played or run has reached the levels of experience where demi-human level limits kick in. And I think this is a common experience. (This is with the exception perhaps of long campaigns when I was a kid, but then we were playing BECMI, not AD&D, so it an wasn't issue.) Thus, players of demi-humans basically get all this cool stuff "for free" as it were, leaving their human comrades feeling a little under-par.
I have to say at this juncture that I don't care about balance purely for its own sake, in mechanical terms (for therein lies the road to 4e). The only reason I'm drawn to consider this is my observations of how players of "lesser races" (i.e. humans) feel overwhelmed by their "do anything, +4 on saves, see in the dark, oh and by the way I speak 7 languages" counterparts.
A novel remedy to the situation came to my mind the other day, which I shall describe.
1. Remove Limits
No level limits for demi-humans. Gone. They're rarely relevant anyway, and do nothing to create a sense of balance. Limits of class by race could also optionally be removed, if you want to go all the way.
2. Remove Some Benefits
Firstly multi-classing. As I've discussed before, that's the real killer for me, resulting in characters who can "do anything" -- honestly, who needs a thief when you have a multi-classed magic-user / thief at hand?
As a second reduction in demi-human power I'd suggest the removal of infravision from all playable races. It seems like only a minor perk on the face of it, but in practice is extremely useful (depending on how lenient the DM's interpretation of its precision is). I just find it more atmospheric when PCs are venturing into dark places with naught but a feebly flickering flame to guide them.
3. Boost Humans
In order to make humans attractive, all that remains is to give them a few perks in the same order of magnitude as the demi-human racial abilities (things like the dwarven stonework abilities, extra languages, saving throw bonuses, etc).
Here's what I thought of, though of course many other things would be possible.
- +1 to any two attributes (player's choice).
- No attribute limits (min 3 / max 18 for all scores).
- Use any weapon without penalty. (Magic-users only.)
- Wear one better armour than usually allowed. (Thieves or magic-users only.)
- One thief skill which advances with level. (Non-thieves only.)
- Ability to cast one 1st level magic-user spell, chosen at random from the list in LL. (Non-magic-users only.)
- Ability to cast one 1st level clerical spell, chosen at random from the list in LL. (Non-clerics only.)
- Turn undead once a day as a cleric of equal level. (Non-clerics only.)
- +4 to one saving throw (player's choice).