I was wrong.
I picked D&D back up last year after reading a little about the retro clones, and with a different group of people, I now DM a Labyrinth Lord campaign (I actually started with only one player and have picked up some more along the way). I run another (completely different) homebrew campaign with modules dropped in at various points to add some variety. Anyhow, I decided to make an encounter deck for night time encounters that included a lot of undead. The best time to encounter the undead is at night, right? ;-)
When selecting what should go into this deck I had to make a choice: use level draining undead in there, or not? I deliberated over it for a bit and then figured, what the heck, let's give it a try and test my assumptions. What a test, I know. Going from one extreme to the other... never using them, to adding them to the random encounters sure is one hellova way to test my assumptions!
Last night was our weekly game session and guess what, we had a random encounter occur at night. The party member that was on watch, Boris Blood, noticed an incorporeal figure advancing on the camp, wearing a suit of armour. It's face was frozen in a contorted look of horror. He roused the group, who tried to hail the apparition, but it ignored their attempt to parlay and continued to advance on them. They readied their weapons and fought the thing.
The party is mostly made up of 4th level characters and aside from one of their henchmen panicking and almost fleeing the battle field, the fight went very well. The wraith was defeated, although the group panicked when they found it could fly and it was going straight towards the party wizard (it was a funny moment to see him sprint away as fast as he could!), but overall, nothing unbalancing happened at all.
So now I've realised, level draining undead aren't so bad after all.. but perhaps best not to deploy them against really low level characters (say, levels one to three).