- A log scale is far better than a linear one. While it's not top-end limited, it does tend to flatten the scale markedly.
- A decay function on older contributions is helpful. Especially if users start abusing the system. Bank karma, abuse system, run karma down slowly, with an eternal linear system. With a logrithmic decaying system, abuse degrades reputation far more rapidly.
- Other options are to rank users by percentile or other bases. Given the various problems of innate / explicit moderation / ranking (see A Better Wayto Rate Films: http://blog.goodfil.ms/blog/2011/10/07/a-better-way-to-rate-... ) an explicit percentile norming preserves meaningful distinctions (though individuals ratings may not be directly comparable).
I don't think encouraging activity is necessarily good. A lot of comments do not really contribute something useful to the discussion. I'd rather people just posted when they have something really useful or insightful to say. Less comments means less time wasted for the readers.