When your familiar dies and you have only just started your character, you may end up going back down to level 1 from the exp loss. I would suggest that a simple fix be added so that you cannot go below 1000 exp as the result of familiar death.

Agreed, had the same problem. Lost 600+ xp when my familiar died.

Is this really a bug? I'm not sure whether or not level two is actually a minimum level, or just your initial level.

(note to self: NW_CH_AC7)

Final decision on this, reached recently, is that level 2 should indeed be the minimum possible level.

Fixed.