I have been concerned for a while about how to treat experience totals in D&D 3.5 when a character gains or loses Level Adjustments (LA). Gaining/losing LA in play is too punitive and is inconsistent with the rules for starting with LA.
Under a strict reading, the rules work like this: A starting first-level character with the drow template has LA +2 and gains levels at the rate of a third-level character. This is implemented by starting with 3000 XP and needing 6000 total to advance to second level. Compare with a character who starts as a human, is immediately bitten by a radioactive elf, and gains the Drow race. He gains LA +2, and needs 6000 total XP to reach second level (ECL 4). Not only has Drow-man been slapped with a major penalty, he has to earn 3000 experience before he is back to the starting point for first level. If he had previously gained some XP, it is also completely undefined how many XP he can spend on e.g. item creation.
I solve this by adjusting current XP when LA changes: subtract the experience to reach the character’s former ECL, then add the experience to reach the character’s new ECL. So for Drow-man, I would subtract the xp to reach ECL 1 (zero XP) and add the xp to reach ECL 3 (3000 XP). This makes it so you just need to gain the XP to level at a slower rate, instead of being penalized for not leveling slowly before.
I’ve used this approach before in play to deal with PCs contracting lycanthropy, and it worked fine. However, I am concerned that there may be some balance issue or exploit that I have not considered.
So: is there any way that this change is worse than RAW?
 Of course it doesn’t usually work that way for Drow. But it does for lycanthropes, and I want to avoid discussing gaining hit-dice while introducing this.