I think that what's going to wind up happening is that as you level up your old gear's numbers get lower, actually, and you get new gear that has damage output that is higher again. So it's very much a treadmill, despite the fact that the tier number and civilization level continue to go up, but that's true in any case. And you'd still smack the heck out of lower-level monsters because as the civilization level goes up THEIR numbers go down just like the equipment numbers do.
Anything that's equal to the civ level would essentially seem to be in stasis, and anything higher or lower than it would constantly be going down in stats every time you level up. So when you level up, your stuff and the enemies all get worse at the same rate, but new stuff that isn't yet worse opens up, as do more powerful enemies. I think this is the only clean way to handle health and MP, too.
It's a really different sort of approach than the traditional model, but in no way is this an RPG. The progression element here has a lot of non-numerical effects on the game, such as opening up new things to find, opening up more of the world map, and so on. So there's a tangible linear side there, too, where you make progress that doesn't "degrade" with time.
And you're right, this is the inevitable byproduct of trying to fit infinity into anything. But this game isn't about "hey, come grind some levels and get those numbers higher!" at its core. At its core it's about exploring and finding new stuff, and always having a challenge that's higher-level than you that is interesting to take on. That second one requires the infinity bit, and the first one makes the numbers game fade into the background for most players (I expect) so long as the relative difficulty isn't mysteriously dropping as they play.