A friend mentioned racial versions of classes in Adventurer Conqueror King. Seeing some blog posts about racial level limits got me to think of that as a work around.
The consensus seems to be that the AD&D racial limits are the wrong solution to an acknowledged problem. Otherwise there's little reason that Elves won't be the majority PC race in campaigns.
Imagine the normal AD&D Magic-User spell progression chart. Elves are limited in AD&D to 9-11th level, limiting them off to 5th level spells. The "Elven Mage" continues to gain levels at 10 and above, but the spell progression differs, giving them more 1-5th level spells rather than 6th-9th.
I can imagine dwarf fighters than gain HP beyond their "normal" fighter level limit, but not increased chances to hit.
This is just a step beyond live brainstorming. Thoughts?