There's a post on The Mule Abides about the OD&D 1% maintenance cost, something I've posted about myself on occasion. In the comments, Charlatan states: "I fail to understand the system that ties accrued experience points to lifestyle." I gather from this and other statements that Charlatan is in the "Level indicates training and expertise" camp, a perfectly valid interpretation that really first becomes established in AD&D: you have to pay training costs to increase your level, and you gain weapon proficiencies every couple levels.
I'm in the "Level indicates status and luck" camp. The primary support for this interpretation in OD&D is the rule about building a stronghold (or starting a thieves' guild) at name level. The increase in hit dice also mildly supports this stance, since hit points in their earliest form represent luck and stamina.
There's also the xp for gold factor. Much has been written about the link between experience points and treasure being a highly abstract way of representing the non-combat challenges of the adventure. This is true, but also consider this: you get xp for treasure when you return to town. It's the flashing of gold coin in front of the townsfolk that converts cash into experience (and eventually level.) This is why you don't get experience for bringing back used mundane equipment; no one thinks of you as a great hero because you now have five coils of rope and an extra sword. It's also why Dave Arneson tied experience specifically to spending treasure frivolously.
The zero xp adventurer has no reputation to speak of; such people may be able to do a thing or two that ordinary people can't, like cast spells, but otherwise they're considered no better than anyone else. If you want anything, you have to pay full cost, and there's no credit. If you pay for a room, that's what you get: a room; food is extra, and so are candles, and stable fees, and polishing armor, and washing your laundry.
Coming back with treasure is somewhat impressive; you might be able to get a package deal for your basic lodging, because a regular customer with a full coin purse seems more reliable to an innkeeper. You won't get nickeled and dimed for minor items, although you will still get charged for new gear or fancy items. When you level up, some start regarding you as better than the bottom of the heap, as long as they see you spending as much as they think a hero or magician should spend. Eventually, you hit a level where the majority of the populace regards you as a mighty lord or lady (or wizard, or head of a religious order.) They're willing to accept your word as law -- and pay taxes.
To make the Level/Status relationship more obvious, divide however much a character spends on maintenance by 100; a result of 1 or more means a +1 to reaction rolls if you have 10,000 xp or more. If you don't have the experience, people think you're a braggart. If you start acting like a lord of the manor, the modifier is a -1 instead, unless you really are a lord of the manor, or have 100,000 xp or more. If you have the 100,000 xp, but you're spending much less and don't own a manor, again the reaction modifier becomes -1, because you're living below your station.