This happens to numerous characters in Magic: The Gathering. Crovax and Ertai each take about twenty levels in badass when they sign up with the Phyrexians; Mirri gets this benefit in the alternate timelines for Planar Chaos when she inherits Crovax's vampirism and insanity. Kamahl takes a level in badass when he becomes the Fist of Krosa, and his sister takes a level in badass when she becomes Phage the Untouchable.The meta-storyline of first 10 years of Magic effectively started with one determined and slightly less then moral Thran healer taking several levels in badass to become Yawgmoth and then one determined, slightly less then moral and spiritually troubled by his brother's demise human artificer taking about equal amount of said levels to become Urza Planeswalker to combat him.
Flip cards – creatures that, if you do what their effect request, turns into much more powerful, Legendary Creatures.
And now Magic has the actual mechanic Level Up, which lets a creature upgrade over time to become truly badass.
Planeswalkers in general. Starting out as regular, everyday members of their species, then after going through a life-changing experience, becoming nigh-immortal god-like beings with the power to walk between worlds (and that being one of the more mundane powers a planeswalker possesses). Subverted after The Mending. The powers granted by the Planeswalker Spark are greatly reduced. The only new power a planeswalker gains is the ability to walk between worlds. However, the new storylines make a point of showing just how special that power really is.
Yu-Gi-Oh!! has few cards that tells a story, if put together. Cute but weak Gigobyte becomes Gagagigo◊, who is quite badass, but it's not enough for him – with help of cybernetic he turns into much more dangerous◊ forms◊. Then he realizes that he chose the wrong path and goes back to the right side◊.
Also includes the Impachi line, a forest guardian who becomes more and more powerful with technology until burning to ashes.
And any card with a Level mechanic, such as Armed Dragon or Mystic Swordsman.
Gaia the Fierce Knight has been taking Levels ever since the game began. First there was Gaia, a fairly mediocre Monster from the first set, who became respectably strong when fused with Curse of Dragon. As time went by, that seemed to fall out of favor... so he gritted his teeth, willed himself a pretty useful effect, and became Swift Gaia. Then when that started to wear thin, he became a Synchro Monster (and was the strongest one of his level bar Goyo). Then that Synchro got a fusion. Then he laid in wait for a while... until the Chaos Xyz mechanic showed up and he jumped on that wagon, too. There's probably never been a time in the game where some form of Gaia wasn't usable.