I completely agree with the dlvl issue. I noticed it a lot when I was lvling THM and was in a party on the 38-39 mitelings around Nophica.

I was the lowest level party member but my gear was the best possible at that level. (no materia though)
The highest level party member was also a THM but with horrible gear, mostly crafter gear and then some MND stuff.

However, the 3-4 levels that separates us made his at least DMG 20-30% higher than mine.

I was not as annoyed as I was simply surprised that 3-4 levels could do such a difference, and it made me feel as if gear just didn't matter at all. Even though gear is basically all we have to make ourselves better.