The only way we are doing level 3 skill chains is by closing with a WS:
http://www.youtube.com/watch?v=bEcEi7zOaBU (not my video)
You're giving up your first 2 spell's damage so you can get TP for your WS (or you're stuck relying on wings/Shikikoyo). Brilliant! The damage on the video isn't very impressive despite being up against EP, but she doesn't appear to be maximizing her WS damage either (no weather, no gear swaps, etc.).
Of course level 2 and level 3 skill chains get all the bonuses that level 1's get, but you are crippling your damage output by going after them due to the limitations SCH has to live with. If you do a nice neat 2-step Detonation with Thunder IV and Aero IV, you can follow it up with a bursted Ebullience Aero V or Amenohelix. Your closing spell, skill chain, and bursted spell are all the same element (allowing you to easily take advantage of staff/day/weather bonuses). This maximizes your damage more than a 3-step anything else using the same number of Strategems.