I always see battling as both a battle between writing (who is the better writer, or the *smarter* writer, i spose) and who is the fairest, really. Levelling just gives you a cap, really. Say you had a roleplay that had been going for a few months, then a person just joins and challenges another person to a pokemon battle, he could technically win if there was nothing in ... well, stone (like a level that someone has worked towards getting high). Levels, like type, are just another factor that goes in that can help members and a GM determine who is going to be the winner.
i mean in a roleplay anyway, everyone works towards something, be it character develop, raising their pokemon, gathering items, trying to get to the end or just all of them combined
god i hope i made sense.