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In Oblivion I could gain what seemed to be infinite levels by going to jail to lower my skills and leveling them back up. I could repeat this process as many times as I could stand. By doing this you could raise your level well into the hundreds maybe more. If the same concept applies to Skyrim you could in theory collect all the perks. Has anyone tried doing this with any success?

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marked as duplicate by kotekzot, deutschZuid, Doozer Blake, Kexlox, kalina Apr 27 '13 at 16:22

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No you can't. In Skyrim you only lose progress towards one or more skill advancements, not already increased skills.

Source: UESP and ingame loading screens.

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No, going to jail will not lower your skills nor raise your level cap.

On PC, you can use Uncapper along with SKSE in order to raise the level caps. You can modify the script to be virtually unlimited, but the level cap is raised to 300 using Uncapper mod. Uncapper is a "plugin" for SKSE so you must have SKSE installed to use Uncapper.Without Uncapper I would no longer have any interest continuing playing Skyrim after I'm maxed out.

Here's the link to the Uncapper mod: http://skyrim.nexusmods.com/mods/1175/
and here's the link to SKSE: http://skse.silverlock.org/

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(This is an update to the current answers, regarding Patch 1.9's changes.)
With Patch 1.9, individual skills can be made "Legendary", denoting them with an Imperial symbol. This will reset the skill to 15, and perks used for that skill may be redistributed. Gaining levels in that skill will affect leveling again, thus effectively removing the level cap of 81. There is no restriction on the number of times that skills can be made Legendary. This change makes it theoretically possible to obtain every single perk in the game.

Source: UESP wiki, "Skyrim - Leveling" article

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