How would that work with dungeons where you don't really go up or down? I always imagined that in the cases of Mirkwood and the Old Forest, going 'deeper' would simply be a case of 'closer to the heart of'. Similar for the barrow downs, as weren't they just a bunch of ancient burial mounds in the books? Artificial hillsides, in other words? Those things tended to go along more than down into the bowels of the earth.
I get that impression from the exits nearly always being on the edge of the map in such areas, rather than how they're randomly scattered in 'underground' dungeons like Orc Caves or Moria, too.
Anyhow, as to the numbers... I go through moods as to which I have switched on. I kinda like feet, but level numbers means I don't have that momentary pause in mental math to work out roughly how far down I am
Either works for me, though.