I don't mean to utterly crush the point but I think this has shifted away enough from the original topic for it to be relevant.
My point consists of: Level matters only as much as narrative dictates it does and punching up is always possible.
I have heard and seen nothing yet to counteract this simple thesis: overwhelming power is great and all if fiction and reality both didn't abound to it not automatically equaling victory.
Indeed several are the combats in game thus where the MC can have trouble not because of hurdur stronger level hurdur but because of strategy or powers not matching up well. Big Titty Gym Girl's monster for example is essentially a joke, same for Oscar's monster but with their abilities and instinct they can prove themselves an annoyance to the MC who by that point can essentially one shot them if they can actually land a blow(in the fashion that he did when he did eventually land said blow)
Point is the game supports the notion that this works to a lesser or greater degree much like it does elsewhere.
Why we did indeed stray a little far didn't we? You still haven't provided the grand plan to destroy HERO and their super oppressive government so I have been just dissecting your points, after all you were the one straying in the first place by bringing Napoleon and other heroes' universes to the argument (not that I mind, it has been fun so far).
And no "punching up" isn't possible after a certain point. The game makes it very clear that levels 5 can just no-sell attacks from lower levels, just look at Clark weakened and passed out during the Diamond battle and still tanking hits like a champ from the bat monster that was giving hell to everyone else in there. Keep in mind the MC was at levels 1 and 2 and fighting things that were at level 1 and 2 for about 95% of time so far in the game, only in the 2 last updates he managed to get to level 3, and a level 1 Jared couldn't touch him after that even with a surprise headshot while exhausted from the battle with monster Deryl, but that same headshot managed to blow Lauren's head off.
And all this is still not counting our 2 resident level 5 timelords, again.
Wait? They erased mc? How did I miss this from the game.
It happens in a bad end, when they Eye asks you to help it say yes, and have around 25+ corruption to be able to see it. Basically the eye hijacks the MC's body and connects it to the Apostle's plane making it nigh invulnerable so Deus has to erase him from the timeline from another point in time, it's a pretty cool segment and worth losing a few minutes editing a save if you don't have enough corruption points to watch it.