This bug is now fixed as far as I can tell. Yay!
For anyone that is curious, the bug only affected the level of the host's monster form. Whenever another player's monster would spawn into the arena or change forms in the M_Changer computer, the host's monster would get its level set to that monster's level. The xp was never reset though so you could always go to the Wilds and have 1 battle to reset back to your original level.
Let me know if you encounter a similar issue so I can get to fixing it right away.
Also again, anyone who has any issues with levels getting reset, please don't hesitate to contact me so I can reset everything back for you.
See you In-Game!