I believe levels shouldn’t be a factor in damage for PvP. Two players at a different level should be able to compete with each other without one of them dealing little/no damage to the other. A level 30 mage with no STR shouldn’t be able to beat a level 26 warrior easily to death with just a staff.
Leveling up gives stats on top of giving you a damage advantage over lower level mobs/players, so you would be much stronger against a level 29 as a level 30. Levels shouldn’t matter in PvP because higher levels already have more stat points spent than lower levels. Their builds and equipment should be the only thing that affects their damage in PvP; all players will be treated as the same level.