I do like your proposed modification a lot. Making the gyms scale to you would be appropriate, and I'm pretty sure I remember that even being referenced in the anime at one point. A world where the areas closest to each town are generally pretty easy (because it would make sense that people would work to drive away more dangerous pokemon from their homes) while more remote areas have rare and powerful pokemon that don't appreciate intruders.

Let the gyms scale based off how many badges you have and you could absolutely make a believable and enjoyable open world pokemon game. You could even let players pick their starting town in such a scenario, and perhaps that would change what starters are available or give other starting perks/bonuses.