I am pretty sure I am on the last dungeon now. Between work and doing the sidequest so I am sure I am set up for New Game + (I am not going to do it right away, but maybe in the future, when the new game schedule slows down), I should have the game finished in the next 2 days, in time for the Valve goodness and Folklore.
From where I left off in this thread, Party Levels only make the game easier. Like, really easy. Counterattacks are introduced, but they are kind of useless because the timing for them is too fast, and the game is so easy that I'd rather block than risk taking damage by hovering over the wrong controller button. You can also string together specials, which makes things damned simple.
The story has taken something of a misstep since the mid-game goodness. It's not as bad as it was for the first 2 chapters or so, but it doesn't seem cohesive anymore. It's not really detrimental, doesn't bug me at all actually. It just loses the focus you thought it had, and you aren't really sure whose story this game actually is. There is also a sharp turn at the end of 6 that feels like it could have been smoothed with another chapter or so.
Overall, still loving it. I would have said differently earlier, but I can see myself revisitng this game in a few months to get the second playthrough achievements.